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While a slowdown in Macau, the world’s number one gaming destination by revenue, has many analysts lowering growth forecasts and cutting stock prices, Goldman Sachs says there’s too much pessimism over the gaming market and investors could see good value in the long term in certain stocks.
Recent signs of recovery in China’s property market, and lowered concerns over the economy should boost weakness in the VIP or high-roller segment in the fourth quarter, according to the investment bank.
The VIP segment, which contributes about 70 percent of Macau’s revenue, has seen a pullback in recent months, because of a credit crunch in China created by monetary tightening late last year.
Goldman, however, points out that Macau’s gambling revenue picked up 12 percent in June compared to the same period last year. Gaming revenue grew just 7 percent year-on-year in the previous month of May, down sharply from growth of 26 percent in the January to April period this year.
The bank upgraded Wynn Macau , a unit of U.S. gaming firm Wynn Resorts , from sell to neutral, because its shares no longer traded at a significantly higher valuation than those of its peers.
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