Wynn Leads Casino Decline on Slowing Mass Market Growth

Wynn Macau Ltd. (1128) and Galaxy Entertainment Group Ltd. led declines in Macau casino stocks after the world’s largest gambling hub posted the weakest monthly growth in mass market revenues since 2010.

Wynn Macau, a unit of Wynn Resorts Ltd. (WYNN), fell to almost a three-year low before ending down 7.6 percent at HK$29.35 at the close of trading in Hong Kong. Galaxy Entertainment, founded by billionaire Lui Che Woo, fell 6.4 percent to HK$59.40, its biggest decline in three months, while Sands China Ltd. (1928) lost 5.8 percent.

“The mass market growth of 17 percent was disappointing,” Alison Law, head of consumer research at Daiwa Securities Co. Ltd., said by telephone today. “Investors didn’t expect the monthly mass market growth to be the slowest in years.”

Macau’s July monthly casino revenue breakdown, released late yesterday, showed the mass market growing 17 percent from a year ago, “the lowest result since we started tracking the data in 2010,” Cameron McKnight, a U.S.-based analyst at Wells Fargo & Co., wrote in a note today. The sector had risen by 27 percent in June, according to Barclays Plc analyst Phoebe Tse.

Cutting Estimates

Deutsche Bank cut its forecast for Macau casino revenue growth in 2014 to 6 percent from 9 percent, citing the weak mass market increase and slower-than-expected VIP recovery after the World Cup football tournament, its Hong Kong-based analyst Karen Tang wrote in a research note today.

The bank reduced its expectations for mass market revenue growth in the second half of the year to 16 percent from 23 percent, and estimates VIP revenues will fall 7 percent instead of a 3 percent decline previously, according to Tang.

Melco Crown Entertainment Ltd. (MPEL) slid 4.8 percent to HK$78.65. MGM China Holdings Ltd. and SJM Holdings Ltd. fell 6.3 percent and 3.4 percent, respectively. Hong Kong’s benchmark Hang Seng Index declined 0.8 percent.

Macau casino revenue fell 3.6 percent to 28.42 billion patacas ($3.56 billion) in July, the second consecutive month of declines, as the World Cup soccer tournament distracted bettors while business from high-stakes gamblers remained weak.

To contact the reporter on this story: Vinicy Chan in Hong Kong at vchan91@bloomberg.net

To contact the editors responsible for this story: Stephanie Wong at swong139@bloomberg.net Daryl Loo

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