June 9 (Bloomberg) -- Melco Crown Entertainment Ltd., the Chinese casino operator, sank to an eight-month low in New York after Wells Fargo & Co. and Deutsche Bank AG cut estimates for gambling revenue growth in Macau.
Melco’s American depositary receipts fell 5.7 percent to $30.71, the lowest since Sept. 12. The ADRs, each representing three underlying shares in the company controlled by billionaires James Packer and Lawrence Ho, traded 4.7 percent lower than the shares in Hong Kong, the widest discount in a month.
Growth in gaming revenue in Macau, the only place in China where casinos are legal, will probably increase 1 percent to 5 percent this month, according to Wells Fargo analyst Cameron McKnight, who previously estimated a 6.5 percent increase. Deutsche Bank lowered its projection for annual revenue growth three percentage points to 12 percent. Union Gaming Group LLC cut Melco and six other Macau casino operators to hold.
“We expect to see a string of negative headlines over the coming months that will keep pressure on shares and believe there is greater risk to the downside than the upside,” Grant Govertsen, an analyst at Union Gaming, wrote in a research note today.
The Macau Monetary Authority plans to further restrict the use of China UnionPay Co.’s cards at casinos, curbing money flow to the city, according to Ambrose So, Chief Executive Officer of SJM Holdings Ltd, Asia’s largest casino operator by revenue. The banking regulator also ordered jewelery shops and pawnshops that operate on casino floors to remove their UnionPay card terminals by July 1, So said in an e-mail. UnionPay is a mainland state-backed payment company.
Gambling revenue in Macau rose 9.3 percent in May from a year earlier, the city’s Gaming Inspection and Coordination Bureau said June 3. That was below the 14.5 percent average estimate of seven analysts surveyed by Bloomberg News.
Union Gaming cut its 12-month price estimate for Melco by 31 percent to $34.
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