Macau Gaming Stocks Gain as September GGR 'Beats' (LVS) (MGM) (WYNN) (MPEL)
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Macau gaming stocks including Las Vegas Sands (NYSE: LVS), MGM Resorts (NYSE: MGM), Melco Crown Entertainment (NASDAQ: MPEL), and Wynn Resorts Ltd (NASDAQ: WYNN) are indicated higher Monday after September GGR in Macau increased 7.4% to MOP18.4b, which beat expectations of 5%.
Nomura analyst Harry Curtis said while headline number should invigorate the bulls, they are skeptical about the sustainability of the growth for several reasons:
1) We believe that the comp to cash ratio at several hotels has risen recently, which when normalized, would lead to lower GGR;
2) We also believe that the amount of credit issued recently has increased. The question investors must ask each operator is if bad debt reserves are increasing as well. It may take one or two quarters before write-offs of uncollectible markers becomes evident.
And, 3) Once Golden Week this week ends, we expect the daily GGR in Sept. of MOP639m to decline to MOP600m or less.
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