A Snapshot Of The Vegas And Macau Casino Business

Casino investors are taking profits on Thursday following positive monthly gaming revenue numbers from both Las Vegas and Macau. The numbers out of both gaming hubs confirm that strong underlying revenue growth is behind gambling stocks’ recent outperformance.

Las Vegas Strip revenue climbed 8.3 percent in October, while Macau recorded a 14.4 percent revenue gain in November, its biggest jump in nearly three years.

Bernstein's Take

While traders may be taking the opportunity to lock in gains, Bernstein analyst Vitaly Umansky remains bullish on casino stocks following the latest revenue numbers.

“We view the Macau gaming industry as a secular growth story led by the accelerating paradigm shift from VIP to Mass driven by supply ad infrastructure improvement,” Umansky explained.

Bernstein is now projecting December Macau gross gaming revenue growth of 13-15 percent.

According to Umansky, China’s crackdown on corruption in Macau forced a temporary stall in Macau’s growth and a shift from reliance on the VIP market to reliance on the mass market. Now that the transition is complete, he believes Macau will return to growth over the next decade.

Other Ratings

Bernstein maintains Outperform ratings on Melco Crown Entertainment Ltd (ADR) MPEL and the China units of Wynn Resorts, Limited WYNN and MGM Resorts International MGM.

The firm has a Market-Perform rating on the China unit of Las Vegas Sands Corp. LVS.

All four stocks are up between 3.8 and 11.2 percent in the past month.

Disclosure: The author is long MPEL.