Halister News

(Bloomberg) -- Macau casinos may see players gambling less, impacting near-term gross gaming rev. (GGR) momentum, as visitors seek to avoid scrutiny, Goldman Sachs’s Simon Cheung writes in note following Daiwa report last week that one of Macau’s largest junket operators issued memo warning customers, key staff of "liquidity channel impairment" amid increased enforcement of anti-money laundering initiatives.

• The junket operator has since been reported by analysts to be Suncity
• Cheung questions whether this will "structurally impair the money transfer mechanism deployed by agents or players"; for now still sees this as part of government’s initiatives to better monitor capital flow, and not as targeted crackdown of junket system in Macau
  • Capital outflow via junket VIP "is not that significant," Cheung says; although expects share prices to remain volatile until actual impact of investigation becomes clear, as past incidents suggest lackluster performance 1-2 months after tightened measures
• Goldman rates SJM, Wynn Macau, MGM China buy, Galaxy, Melco Resorts, Sands China neutral
• Meanwhile, Nomura Instinet analyst Harry Curtis warns clients in note that investors "should be prepared for slower VIP growth, whether it’s from tighter liquidity or simply more difficult comps."
  • Incident last week increases perceived risk that Macau growth will slow, due to either greater government intervention in banking system (that influences liquidity that feeds junket system) or more difficult comparisons Macau’s growth rate faces beginning in 4Q
  • Nomura rates MGM buy, LVS, MLCO, WYNN neutral

To contact the reporter on this story: Janet Freund in New York at jfreund11@bloomberg.net To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net Courtney Dentch