Macau casino shares to counter downward trend

As GGR is set to shrink in 2019, JP Morgan expects casino shares not to follow as “all negatives have already priced-in.”

Macau.- Nearly every brokerage and investment bank has already forecasted a gross gaming revenue (GGR) drop in Macau for 2019, but it seems that stock value is set to avoid such a trend. According to JP Morgan, casino operators’ shares are worth a look as “most of the negatives are well known and already (if not overly) priced-in.”

In a note signed by the brokerage’s analysts DS Kim and Sean Zhuang, JP Morgan states that it still forecasts a 1% shrink for annual Macau GGR in 2019, while it expects the VIP market to go down by 6%, and mass-market revenue expand by 3%.

“The trends in Macau have been surprisingly resilient if not strong – despite a challenging macro backdrop and ever-growing concerns over a downturn,” analysts stated and assessed: “Granted, these stocks are still tethered to macro factors and overall market volatility, but we see good values and believe the risk-reward is compelling for patient investors.”

“Even the sceptics would agree that the quality of Wynn’s assets is among – if not the – best in the global gaming industry, which is supported by the best-in-class management team,” they said andadded: “Sands remains a low-risk, solid return investment opportunity in Macau. We look at Sands as an attractive way to play the structural mass story given its outsized exposure to this segment (mass and non-gaming driving 90% plus of EBITDA).”