Credit Suisse: Buy 'Any Dips' In Macau Stocks

Now that the latest monthly gross gaming revenue (GGR) numbers from Macau are out, Credit Suisse analyst Kenneth Fong updated his outlook for Macau casino operators Las Vegas Sands Corp LVS, MGM Resorts International MGM, Wynn Resorts Ltd WYNN and Melco Crown Entertainment Inc MPEL. Although Fong is still waiting for positive data points indicating a recovery in Macau, he believes that investors should be buying any dips in the Macau names.

Sequential stabilization
Macau GGR fell 35 percent year-over-year (Y/Y) in July, but demonstrated sequential stabilization.


VIP GGR was down 46 percent in July, while mass revenue was down only 18 percent Y/Y in July compared to June’s 26 percent Y/Y decline.

Market share
The biggest overall month-over-month (M/M) market share gain went to Sands, which took about 1.0 percent share from its competitors. Melco Crown Entertainment gained about 0.9 percent mass share and gave up about 1.0 percent VIP share.

Observations
According to Fong, mass-market revenue numbers in July were better than Credit Suisse had anticipated, and the recent loosening of travel restrictions in Macau should provide a boost to mass numbers in coming months. While VIP numbers in July remained weak, they “seem to have stabilized.” Finally, Fong points out that weekly Macau revenue “seems to be bottoming.”

Buy the dips
Fong has yet to see data points indicating a recovery in Macau, but he has a positive long-term outlook for Macau. “We see any dips as buying opportunities,” he adds.

Credit Suisse has Outperform ratings on the China units of Las Vegas Sands, MGM and Wynn.

Disclosure: the author owns shares of Melco Crown Entertainment.