Galaxy Leads Casino Gains as Goldman Positive on VIP Growth
Galaxy Entertainment Group Ltd. (27) rose the most in more than 2 1/2 years in Hong Kong trading, leading gains in Macau casino stocks after Goldman Sachs Group Inc. said it is positive about growth prospects in high-stakes gambling.
Galaxy soared 18 percent, the most since January 2009, to HK$12.40 at the 4 p.m. close in Hong Kong after Goldman upgraded the shares to “buy” from “neutral.” The company’s value “has emerged after its 45 percent share price correction in the last two months,” analysts including Simon Cheung at Goldman, wrote in a note to investors.
Macau casinos soared for a second day, erasing most of a decline from last week that was fueled by concern cooler economic growth in China would damp demand and rising interest rates would choke credit to gamblers visiting on junkets. Gaming revenue for the first nine months of the year in the former Portuguese colony exceeded the total amount for 2010, data published Oct. 4 by the government showed.
“We remain positive on the long-term growth potential of the VIP segment, which our analysis shows is not saturated,” wrote Cheung. “Regarding credit supply, there are no noticeable signs of bad debt in the junket system yet.”
Melco International Development Ltd. climbed 9 percent to HK$5.47. Sands China Ltd. (1928), controlled by billionaire Sheldon Adelson, rose 5 percent. SJM Holdings Ltd. (880), the biggest casino operator in Asia, advanced 4.5 percent.
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