JP Morgan advises investors to wait for a better entry point into Macau-related gaming shares, as it expects short-term pressure on share price performance.
The investment bank reviewed last week its full-year forecast for casino gross gaming revenue (GGR) growth in Macau to 13 percent from a previous estimate of 17 percent. The downward revision is based on a softer growth forecast for the VIP sector, down from 12 percent to 6 percent. JP Morgan’s growth forecast for the mass-market sector remained unchanged at 32 percent for 2014.
The investment bank is forecasting GGR growth of just 4 percent for this month from one year before, to MOP29.4 billion (US$3.7 billion), already considering the potential impact of the FIFA 2014 World Cup on betting volumes. That would mean the slowest growth rate since October 2012, when Macau’s casino GGR increased by 3.2 percent on year-on-year terms.
JP Morgan also revised downward its target prices for the stocks of gaming operators in Macau by between 0.68 percent and 5.71 percent.
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Chief financial officer at gaming product and lottery services provider International Game Technology