Morgan Stanley has upgraded its view of the Macau gaming industry to in-line from cautious, but says the sector is still far from bottoming out and concerns remain.
According to the research house, gross gaming revenue growth expectations have largely remained stable since 2H15. Mass revenue has showed signs of stabilising with the decline narrowing to single digits in December. Thus, EBITDA expectations for 1H16 will likely be similar to 2H15.
However, concerns remain which could trigger further negative earnings revisions. Other risks include RMB depreciation, steeper declines in VIP and premium mass due to more stringent regulations, increase in supply and difficulties in replicating the cost cutting seen in 2015. Thus, Morgan Stanley cautions against bottom fishing, but says stock picking opportunities with certain operators exist.
Source: Asia Gaming Brief
