Sterne Agee Sees Long-Term Gain Opportunities In Macau Gaming

Stern Agee issued an industry report on Macau gaming.

According to analyst David Bain, "September VIP gross gaming revenue (“GGR”) ended -25.7 percent Year-over-Year, while mass GGR was +15.2 percent. October GGR was forecasted to finish -18 percent to -23 percent Year-over-Year."

The report noted that October is off to a slow start. Bain believed that "Hong Kong’s Occupy Central protests" had a negative impact. "Outside of slightly stricter visa controls, many Mainlanders delayed or canceled trips to Hong Kong in wake of last week’s protests. Mainlanders often travel to Macau during their visit or holiday to Hong Kong."

Based on investor conversations Bain thought that "most near-term issues disrupting GGR have bled into Macau stock performance, while long-term positives (new supply, infrastructure, etc), as well as short-term ones (potential for increased capital returns to shareholders and gaming expansion legislation in Japan) are more or less dismissed at this point."

See Morgan Stanley's recent comments on Macau and Hong Kong gaming.

While there is potential for downside pressure, Bain concluded that "significant longer-term gain opportunities from current levels outweigh near-term downside risks."

The firm maintained Buy ratings on all the following companies:

Las Vegas Sands Corp. LVS recently traded at $61.73, up 1.08 percent.

MGM Resorts International MGM recently traded at $21.95, up 0.69 percent.

Melco Crown Entertainment Ltd MPEL recently traded at $26.03, up 3.71 percent.

Wynn Resorts, Limited WYNN recently traded at $182.90, up 1.45 percent.