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Morgan Stanley further revises down 2019 VIP growth estimates

While the Macau gaming industry has continued to see robust mass growth over the first half of the year, VIP growth is expected to see further growth decline in 2019, according to analysts from Morgan Stanley.

Over the first half of the year, the mass market has remained robust, beating its prior year results by 10 percent in 19Q1, followed by a 12 percent (expected) year-on-year improvement in 19Q2.

As a result, Morgan Stanley said it has raised its 2019 mass growth expectation from 7 to 10 percent.
However, stronger than anticipated impacts from the smoking ban, competition from ASEAN, and continued crackdown on illegal underground banking, has led the analysts to further revise down its VIP growth estimates for the year from -6 percent to -14 percent.

The above changes have resulted in Morgan Stanley’s full-year GGR estimate for Macau falling from +1 percent to -1 percent.

When it comes to stock picks, naturally, operators with strong mass focus, including Melco, MGM, and Sands have landed themselves into Morgan Stanley’s “preferred plays” list.

On the other hand, MS analysts said that Galaxy and Wynn are expected to continue to face headwinds due to weaker VIP and construction disruption.

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