But Pinge also cut his estimate for the mass market segment, which many had expected to continue doing well. Growth in that segment has remained robust so far, with a 35 percent increase in 2011 from 34 percent in 2010.
According to Pinge, the mass market is beginning to show cracks. He downgraded growth forecasts for the segment to 20 percent in 2012 from 28 percent last year.
“While overall visitation growth has been strong, this has been buoyed by low-value package tour customers,” Pinge wrote, adding that the growth is being driven by higher-spending customers, who could pullback in tandem with the behavior seen in the VIP segment.
The declines across all segments of Macau’s gaming industry have yet to be reflected in the share prices of the main players, Pinge said. He cut his price targets for the Hong-Kong listed shares of Sands China and Melco Crown to HK$27.20 ($3.50) from HK$31.70 and HK$15.70 ($2) from HK$17, respectively.
"Everything has to be seen from the perspective of valuation. I think the weakness hasn't been priced in," Pinge said. "I think the market is looking for a more optimistic outcome than Macau can actually deliver."
But other analysts say a slowdown has already been priced into the shares of the Macau players.
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