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April 2, 2016

Bad News Bear Macao

According to data released by the Macao Gaming Inspection and Coordination Bureau, gaming revenue in the month of February came in at 17.9 billion patacas, about 16.3 percent lower than February 2016’s number.
The 16.3 percent decline came up short of analysts’ consensus expectations of a 15.5 percent drop.
Shares of Melco Crown Entertainment Ltd (ADR) (NASDAQ: MPEL), Las Vegas Sands Corp.(NYSE: LVS), MGM Resorts International (NYSE: MGM) and Wynn Resorts, Limited(NASDAQ: WYNN) were all trading lower in early trading on Friday by more than 1.4 percent after a mostly positive March.
Searching For A Bottom
March marked the 22nd consecutive month of year-over-year (Y/Y) negative gaming revenue growth in Macau. Revenue once again took a dip in March after only a 0.1 percent decline in February.

February 2015 marked the high point for gaming revenue declines at -48.6 percent. November's GGR of only 16.4 billion patacas represented the lowest monthly gaming revenue total for Macau during the current downturn, but March’s total was the lowest number since.
The Bad News Barrage
Macau has seen a seemingly constant stream of bad news over the past two years. In 2014, the Chinese government announced a crackdown on corruption in Macau.
Increased government scrutiny coupled with a weakening Chinese economy led to a major falloff in VIP gamblers.
In September, headlines of potential junket embezzlement of up to $258 million dollars had investors worried about even more government regulation down the road.
In addition, fears surrounding the impact of a smoking ban in Macau casinos have also weighed on share prices.
Just this week, Wynn reported that construction delays could push back the opening date of its Wynn Palace resort from June 25 "into the second half of 2016."
Sluggish Stocks
Shareholders of the four U.S.-listed Macau names are hoping that the downturn is a cyclical one and that the worst of the selloff is now behind them. The stocks of the four Macau names are down between 22 and 62 percent from their 2014 highs.
Disclosure: The author is long Melco Crown Entertainment.
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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