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Macau growth to benefit Las Vegas casino operators growth: Morgan Stanley

Macau growth to benefit Las Vegas casino operators growth Morgan Stanley

Morgan Stanley, a leading global financial services firm has predicted that Macau's gaming revenue would continue to surge. Macau gross gaming revenue growth would continue to rise as more Chinese throng to the Peninsula.

This would significantly profit Las Vegas casino operators like Wynn Resorts, and Las Vegas Stands as their stocks are expected to go higher, Morgan Stanley said in a report. It predicts Macau gaming revenues would rise nearly a third to $43 billion. It would just fall short of its all-time high revenue of $33 billion. Macau posted revenue of $33 billion last year.

As new infrastructures and new resorts are expanding their horizons, many visitors are travelling to the gaming enclave from small-scale Chinese cities would grow at a clip through 2022, the investment bank reported.

It stated, 'We believe the Macau market is in the early stages of a growth plan, driven by a combination of China’s gradual transition into a high-income country, incoming infrastructure tailwinds for Macau specifically and a more sustainable mix from the mass market.'

The bank also forecast that the projects like an extension of the Guangzhou intercity rail to Hengqin and opening of a new bridge connecting Hong Kong and Macau coming summer would boost the number of visitors to Macau to 45 million from 32 million, compared to last year.

Casinos and hotels plan to open 14,000 rooms over next five years in the world's biggest gambling hub. MGM Resorts International eyes to open 1,400 room MGM Cotai on Jan.29 while SJM Holdings Ltd is mulling to open its Grand Lisboa Palace at the end of the year.

However, MGM is not going to be the big winner among Las Vegas casino operators, while Sands and Wynn might emerge as game changers. Las Vegas Sands owns five properties in the Chinese-regulated region with ownership accounting for 40 percent of four and five-star hotel rooms. This share is expected to drop as more players come into the scene. Bank noted, 'Long-term, Las Vegas Sands should be the major beneficiary given its mass market positioning and an outsized share of Macau's hotel rooms.'

Wynn Resorts own just two properties in Macau but, they are expected to generate 68 percent of companywide adjusted earnings. Wynn Resorts would expand its hold as critical mass shifts to Cotai, where Wynn Palace opened in 2016, the bank stated.

Las Vegas Strip revenue growth would rise just in low single digits in coming years making it paler than Macau.