Casino Stocks Stumble as Macau Gaming Revenues in May See Slowest Rate of Growth in Almost 3 Years
July 02 2012 - 8:20AM
Marketwired
In recent years major casino companies have looked to Macau for a
large portion of their revenues. The has been growing speculation
that visa restrictions and limits on Chinese credit cards have been
major causes for the recent slowdown in Macau's gaming revenue
growth. The Paragon Report examines investing opportunities in the
Resorts and Casinos Industry and provides equity research on MGM
Resorts International (NYSE: MGM) and Melco Crown Entertainment
Ltd. (NASDAQ: MPEL).
Access to the full company reports can be found at:
www.ParagonReport.com/MGM www.ParagonReport.com/MPEL
"Recent weakness in Macau gaming revenue and visitation growth
could be partially explained by the visa restrictions and reduction
in China UnionPay limits highlighted by the Macau Daily," Cameron
McKnight, Wells Fargo & Co. analyst, said in a recent research
note. "While expectations have recently moderated, we believe
outperformance in the Macau stocks is likely to be limited
here."
Gambling revenue in May saw just a 7.3 percent increase, the
slowest rate in almost 3 years. According to Bloomberg, visitors
from mainland China boosted casino revenues in Macau by 42 percent
in 2011. Last year roughly 16 million people visited Macau from
mainland China.
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MGM Resorts International holds a 51 percent interest in MGM
China Holdings, Limited, which owns the MGM Macau resort and
casino. MGM China earned net revenue of $702 million, an 18 percent
increase over the prior year quarter, and an operating income of
$68 million.
Melco Crown Entertainment is an owner and developer of casino
gaming and entertainment resort facilities that are focused on the
rapidly expanding gaming market found in Macau. Net revenue for the
first quarter of 2012 was $1,026.9 million, representing an
increase of approximately 27 percent from $806.6 million for the
comparable period in 2011.
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