Investors appetite down as GGR decelerates

Reaction from investors to Macau’s decelerating GGR growth and related headwinds have been more negative than expected, according to Bernstein analysts, who have revised down target prices across Macau stocks on Thursday.

Last month, the brokerage noted that investor appetite would be limited in the second half of 2018, with concerns of decelerating growth, the Chinese economy, and the escalation of US-China trade tensions to create headwinds for GGR in the short to medium term.

On Thursday, Bernstein analysts said that investor reaction had been more negative than expected, especially in Q3.

“We have updated forecasts based on continued slowdown in Macau (3Q, in particular, has been reduced as it is trending lower than we had originally anticipated) and company-specific estimate revisions.”

The brokerage on Thursday reduced its target prices for Wynn Macau, Galaxy, MGM China and Sands China, but noted that Melco’s TP was reduced last week, and SJM “already reflects a low valuation multiple,” said the brokerage.