Latest news for MGM China Holdings (OTC:MCHVY) Stock

MGM China Holdings

MGM China is one of six casino license holders in Macao and operates two integrated resorts: the MGM Macau resort in the Peninsula and MGM Cotai in Cotai. The company is allowed to operate 750 gaming tables during its new 10-year concession period of 2023-32.

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Goldman Sees An Alpha-Generating Opportunity In Macau Gaming

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Macau Casino Woes Prompt Deutsche Bank Downgrades, Price Target Cuts

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A more favorable policy background and stable Yuan outlook have helped Macau Gaming stocks not to only re-rate, but also to outperform the market by 10 percent in what&rsquo;s gone of 2016. However unlike the past couple of years, shares moved in very different directions. While Wynn Macau is up more than 46 percent year-to-date, Melco Crown Entertainment Ltd (ADR) (NASDAQ: <a class="ticker" href="/stock/mpel#NASDAQ">MPEL</a>) has lost almost 16.5 percent.

	Analysts at Goldman Sachs believe, &ldquo;Sector valuation looks fair at close to mid-cycle now.&rdquo; Nonetheless, they &ldquo;still see beta and alpha generation opportunities.&rdquo;

	Having said this, the analysts recommended investors to behave selectively, keeping a close eye on sector trends and earnings revisions. The firm anticipates:
<ul>
	<li>
		1) &ldquo;Slow VIP GGR on regional competition, bad debt risk and closer scrutiny on junkets&rdquo;</li>
	<li>
		2) Faster growth in mass market, with novelty and cluster effects following a few more casino openings</li>
	<li>
		3) Higher contribution of non-gaming to overall profit, driven by retail, although &ldquo;oversupply could pressure rents at existing properties near term (i.e. Venetian).&rdquo;</li>
</ul>

	As per Goldman Sachs&rsquo; fiscal 2017 estimates, Wynn could post EBITDA 25 percent above consensus, while Galaxy and Sands China could miss by 6 percent. Despite the upgrades seen in recent weeks, the experts believe Wynn could deliver further upside, &ldquo;as the market assumes Wynn Palace will only add 1-2% market share with a table yield 40% below the industry avg. a year later,&rdquo; an estimate that Goldman analysts consider conservative, given the company&rsquo;s track record.

	The firm revised its ratings and price target on Macau Gaming stocks as illustrated in the chart below:

	<img alt="" src="https://www.benzinga.com/files/u82070/macau_gaming_gs.png" />

	Source: Goldman Sachs

Slowing demand from gamblers in Macau and and intensifying competition for their yuan lead Deutsche Bank to downgrade leading players in the sector Friday while slashing targets across the board.

	Deutsche&#39;s Karen Tang also cited rising labor costs and longer times for approval required for new facilities.

	Tang downgraded the Macau unit of Wynn Resorts (NASDAQ: <a class="ticker" href="/stock/wynn#NASDAQ">WYNN</a>) to Sell from Hold and moved her rating on the China Sands unit of Las Vegas Sands (NYSE: <a class="ticker" href="/stock/lvs#NYSE">LVS</a>) to Hold from Buy.

	Both units trade on the Hong Kong stock exchange. Wynn Macau fell 3.3 percent Friday morning; China Sands lost 0.4 percent.

	Macau, the world&#39;s largest gambling center, is the only place in China where casinos are legal and revenues have declined lately in the face of that country&#39;s economic slowdown, as well as a crackdown on corruption that has so far resulted in the reported arrest of more than 60,000.

	As if to add insult to injury, local authorities will impose a smoking ban starting October 6 on Macau&#39;s mass-market gaming floors.

	High-end private VIP gaming rooms are exempt, but China&#39;s smoking rate is nearly 70 percent higher than the United States.

	In addition, Tang made the following target cuts: Galaxy Entertainment (OTC: <a class="ticker" href="/stock/gxyey#OTC">GXYEY</a>) $61.50 from $80; Melco Crown Entertainment (NASDAQ: <a class="ticker" href="/stock/mpel#NASDAQ">MPEL</a>) $29.03 from $41; MGM China (OTC: <a class="ticker" href="/stock/mchvy#OTC">MCHVY</a>) $27 from $32 and SJM Holdings (OTC: <a class="ticker" href="/stock/sjmhf#OTC">SJMHF</a>) $20.05 from $21.50.

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