Stocks: MGM, Wynn lead less-favourite race

2014/9/15

From：Macau Buisness Daily

In a turbulent year for Macau’s gaming operators, investors are pricing down casino stocks. Some prefer less exposure to Macau, others the best performance here.

No gaming operator stands out as the favourite for investors in a year full of negative headlines for the sector in Macau. The World Cup, anti-corruption crackdowns and the upcoming smoking ban are just a few events that have hit casino shares with losses of around 20 percent since January.
Swiss brokerage Atonra published a report on Friday advising its clients to invest in MGM shares and sell Wynn and Las Vegas Sands (LVS). The company believes the Macau market is likely to remain tricky for some time with revenues under pressure and rising labour costs damaging profit margins.
Atonra says Wynn and LVS are too exposed to Macau and are too risky, while MGM only makes 32 percent of its revenues here. With the Las Vegas market reaching the inflection point, the brokerage says expectations are low, the revenues are likely to increase and Sin City should ‘spark a strong operating leverage’. MGM is set to be the best performer in the third quarter as Vegas boosts revenues and profits.
On the other hand, Deutsche Bank prizes operators in a different way. For the German financial institution, Wynn is favourite. Yes, it’s quite exposed to Macau, but has been surfing the turbulent 2014 with a performance above its peers: mass revenue growth has outperformed the market giving Wynn an ‘upside margin momentum’. The operator run by Steve Wynn also has lower estimate revision risk, its operation in Vegas is strengthening at the expense of Macau and its Cotai project ‘has shown little evidence it will miss the opening date’.

Copyright@Macau Business Daily