Casino Operators Win Big on Macau---$WYNN- GAMING 5 X'S GREATER THAN LAS VEGAS-
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By Michael Wursthorn
Despite worries about the global economy, investors are again betting on casino stocks.
Shares of American gambling companies hit a jackpot Monday after Macau, the semiautonomous Chinese city
and the only place in the country where casinos are allowed,
reported an increase in gambling revenue.
Despite a broader economic slump in Asia, people continued to flock to the region's gambling capital,
sending gambling revenue was up nearly 6% last month from a year earlier,
according to Macau's gambling authority,
Gaming Inspection and Coordination Bureau.
Macau is the industry's bellwether, generating more than five times
the revenue of Las Vegas last year alone.
But concerns of a slowdown in the region,
driven by an economic slump and a projected decline in VIP players,
had been plaguing casino operators this year.
The report, which topped expectations, helped ease some of those
worries ahead of companies reporting second-quarter earnings this summer.
Shares of Wynn Resorts Ltd., which operates a pair of resorts in Macau, jumped 7.1%.
Las Vegas Sands Corp., which has been operating in Macau since 2002, rose 4.9%.
Both soared past rival MGM Resorts International, whose shares rose 0.9% despite also having its own Macau casino.
That may be due in part to the valuation gap between Wynn, Las Vegas Sands and MGM.
Wynn, whose shares are up 34% this year,
currently trades at 17.3 times its earnings over the next 12 months, while
Las Vegas Sands trades at 17.2 times. Although they top the S&P 500's 16.6 times,
they trail MGM, which trades at a lofty 21 times its future earnings.
Casino operators who don't have operations in Macau also mostly edged higher
amid a broad market rally following the trade truce the
U.S. and China struck at the G-20 meeting in Osaka last weekend.
Red Rock Resorts Inc., a small casino operator, rose just 0.1%,
while Boyd Gaming Corp., which operates more than two dozen gambling properties throughout the U.S., added 0.9%.
Write to Michael Wursthorn at Michael.Wursthorn@wsj.com
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