Macau Records Best Revenue Number In 5 Months

According to data released by the Macao Gaming Inspection and Coordination Bureau, gaming revenue in the month of October came in at 20.0 billion patacas, about 28 percent lower than October 2014’s number.
 

Shares of Melco Crown Entertainment Ltd (ADR) MPEL, Las Vegas Sands Corp LVS, MGM Resorts International MGM and Wynn Resorts, Limited WYNN are all trading higher by more than 1.3 percent on Monday following the news.
 

Has Macau Found A Bottom?
October marks the 17th consecutive month of year-over-year (Y/Y) negative gaming revenue growth in Macau, but shareholders of Macau names are hoping that the declines have now stabilized.

 

February marked the high point for gaming revenue declines so far in 2015 at -48.6 percent. Since February, Y/Y declines have been trending lower on easier comps. The October number marks the highest monthly revenue total for Macau since May and the lowest Y/Y decline since January.

The Bad News Barrage
Macau has seen a seemingly constant stream of bad news over the past year. Last year, the Chinese government announced a crackdown on corruption in Macau.

Increased government scrutiny coupled with a weakening Chinese economy led to a major falloff in VIP gamblers.

In September, headlines of potential junket embezzlement of up to $258 million dollars had investors worried about even more government regulation down the road.
 

Stocks bounce
The relatively good October revenue numbers capped a strong month for the stocks of the four operators. All four stocks are now up more than 27 percent in the past month.
 

MGM’s October move even put the stock back into positive territory for the year at +11.6 percent year-to-date.
 

Disclosure: The author owns shares of Melco Crown Entertainment and Wynn Resorts.