Casino stocks or otherwise known as gaming stocks tumbled during the financial crisis in 2008 when credit market closed itself to these highly leveraged companies and speculators betted on the collapse of them. Most of these companies lost over 90% of their stock prices over the crash since the peak in 2007.
As the economy is creeping up from the trough, these stocks have been seeing very bullish action this year. LVS, WYNN, MGM, MPEL have seen a rise in stock price as much as 150%, 50%, 10% and 50% respectively.
In addition to the domestic economic recovery, a very large extent of recoupment of losses of these stocks came from their oversea exposure, specifically, Macao for LVS, WYNN, MGM and MPEL and more recently Singapore for LVS. Macao has surpassed Las Vegas to be the largest gaming spot in the world. MPEL and LVS each has three casino properties while WYNN and MGM each has one in Macao. As of September, JP Morgan analysts' channel check showed that SJM carries the largest market share at 31.1% followed by 19.8% of Sands China which is owned by LVS, 10.4% of WYNN Macao owned by WYNN, Melco Crown 16.8% owned by MPEL, Galaxy 12.7% and MGM 9.2%.
According to Macao Gaming Inspection and Coordination Bureau, the gross gaming revenue has recovered sharply from 2009, with each month posting significant increase this year. As of September 2010, the gaming revenue has accumulated to as much as 133.2 billion MOP (equivalent to $16.4 billion).
Monthly Gross Revenue | |||
2010 | 2009 | Variance | |
| Jan | 13,937 | 8,575 | 62.50% |
| Feb | 13,445 | 7,912 | 69.90% |
| Mar | 13,569 | 9,531 | 42.40% |
| Apr | 14,186 | 8,340 | 70.10% |
| May | 17,075 | 8,799 | 94.10% |
| Jun | 13,642 | 8,269 | 65.00% |
| Jul | 16,310 | 9,570 | 70.40% |
| Aug | 15,773 | 11,268 | 40.00% |
| Sept | 15,302 | 10,943 | 39.80% |
No doubt Macao will be the most important source of growth for gaming companies in the world. The million- dollar-question for shareholders will be how much this growth is worth in terms of share prices?
Disclaimer: This blog is for general information purpose only. Stocks/financial instruments mentioned in this blog are not to be taken as investment advice/recommendation. Readers must consult their own financial advisors and/or consider their own risk/reward profile before making investment/trading decisions. The blog author is not liable for any investment/trading decisions of readers should readers decide to base the decisions on information provided by the blog.
Disclosure: The blog author does not own any of the above mentioned stocks in her personal account as of October 18, 2010.
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