Macau valuations reach new low but hope for Q4 recovery: Bloomberg

Macau casino stocks’ 21 percent rally in July evaporated and reversed into a 40 percent plunge to new lows by September’s end, according to Bloomberg Intelligence. 

“The excitement over an easing in Chinese visitation restrictions was replaced by concerns over continued declines in gambling revenue,” Tim Craighead and Margaret Huang wrote in a note.

September is seasonally a weak month and could mark the bottom in gambling activity, if new resorts from Galaxy and Melco Crown, opening October 27, succeed in attracting gaming patrons back to Macau. 

The analysts added that Macau casino consensus EPS estimates have fallen an average 52 percent this year and 62 percent since peaking in June 2014. 

The decline stems from a 37 percent plunge in first half gambling revenue.

“Conservative outlooks on growth during 2Q conference calls spurred further reductions in estimates. Concerns among wealthy Chinese about conspicuous consumption, slower economic growth and a smoking ban all weigh on gambling revenue.” 

“New resorts from Galaxy and Melco offer some hope for 4Q stabilization, and Wynn will follow in March.”