Several of Macau’s casino operators are expected to report record earnings for the first quarter as the Chinese gambling enclave rolls comfortably toward another year of solid double-digit revenue growth.
Only no one’s told investors yet.
“A strange thing has happened since the Macau gambling stocks released earnings nearly three months ago—they’ve gone nowhere,” writes Barron’s Ben Levisohn.
He notes that of the territory’s US-listed operators only Melco Crown Entertainment has posted a meaningful gain since January, up 9.7%. Sands China parent Las Vegas Sands gained 19.7% in January but has since dropped 1.5%; Wynn Macau parent Wynn Resorts, which gained 11.3% in January, has risen just 1.5%; and MGM Resorts International, parent company of MGM China Holdings, has dropped 2.2%.
“The stocks have been held back by a range of issues, including bird flu, weaker Chinese economic growth and disappointing China stock-market performance,” he writes, despite the fact that none of these appear to be impacting what’s going on in the casinos, where gaming revenue was up 15% year on year in the first quarter.
“As a result, we expect four out of the six Macau operators to deliver record-high quarterly EBITDA in 1Q13, +19% YoY on average,” writes Citigroup’s Anil Daswani.
Mr Daswani has raised his growth forecast for the financial year to 15% from 12%, implying a normalized year-on-year increase in pre-tax earnings of 27% sector-wide.
LVS is scheduled to release earnings on 25th April, MGM on 3rd May and Wynn on 6th May.
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