The combined market value of Macau’s six operators is expected to reach $146 billion by 2020, driven by a 13 percent revenue growth CAGR, said Morgan Stanley analysts in a Monday note.
There are, however, significant risks of disruption, including Macau’s license rebidding process and competition from Japan and Hainan for Chinese gamblers.
“In case of license renewal, it could either have a negative monetary impact or outright loss of gaming profit.”
“With the potential opening of Japan and Hainan, the pie could shrink meaningfully.”
MS notes that US gaming stocks are likely better placed to weather these disruptions, but looking at Macau stocks, noted that Galaxy and Sands China are two companies that would be affected the least from the disruptions due to their size and higher margin.