JPMorgan: Hold onto Macau casino stocks

Initial reports on Macau’s gambling industry this year have stated that the gross gaming revenue (GGR) of the sector is expected to see some declines this year. Despite the decrease in revenue, however, casino stocks remain a solid investment. JPMorgan analysts add that the stocks are still worth buying, but as a long-term investment.

Yesterday, JPMorgan published its analysis of the industry, predicting that a “cyclical slow-down” in China’s economy will most likely impact Macau’s casino business. This, it points out, was not new news for investors and shouldn’t have a major influence over stock prices. Analysts DS Kim and Sean Zhuang explained, “Most of the negatives are well known and already (if not overly) priced-in.”

The analysts expect the GGR in Macau to shrink by 1% this year. They also believe VIP gambling will shrink by 6% and that mass-market revenue will increase by 3%.

The firm asserts that Macau casino stock investors need to consider long positions. It adds that the two preferred stocks are Wynn Macau and Sands China, but that the entire Macau sector is strong. The analysts state, “The trends in Macau have been surprisingly resilient if not strong – despite [a] (very) challenging macro backdrop and ever-growing concerns over [a] downturn.”

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