How Macau Growth Could Turn Positive By June 2016

As investors await the final January revenue numbers out of the Macau gaming industry, Morgan Stanley has released a new report claiming that revenue growth could return to Macau as soon as June 2016.
 

Analyst Praveen Choudhary believes that December’s -22 percent revenue number is a further indication that year-over-year revenue declines in Macau have already reached an inflection point and will cross back into positive territory by mid-year.

"We believe this will be driven by increase in overnight visitors, stable competition, better cost management and limited increases in staff salary,” he explains.

Related Link: Las Vegas Strip Revenue Up In December: What's It Mean For Investors

In addition, Morgan Stanley is projecting a return to double-digit Y/Y EBITDA growth in Macau by the end of 2016.

Morgan Stanley's top U.S.-listed Macau pick is Outperform-rated Melco Crown Entertainment Ltd (ADR) MPEL. The firm has an Equal-Weight rating on the China unit of Las Vegas Sands Corp. LVS and an Underweight rating on the China units of MGM Resorts International MGM and Wynn Resorts, Limited WYNN.

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