SOURCE: Paragon Financial Limited

Paragon Financial Limited

July 02, 2012 08:20 ET

Casino Stocks Stumble as Macau Gaming Revenues in May See Slowest Rate of Growth in Almost 3 Years

The Paragon Report Provides Stock Research on MGM and Melco Crown Entertainment

NEW YORK, NY--(Marketwire - Jul 2, 2012) -  In recent years major casino companies have looked to Macau for a large portion of their revenues. The has been growing speculation that visa restrictions and limits on Chinese credit cards have been major causes for the recent slowdown in Macau's gaming revenue growth. The Paragon Report examines investing opportunities in the Resorts and Casinos Industry and provides equity research on MGM Resorts International (NYSE: MGM) and Melco Crown Entertainment Ltd. (NASDAQ: MPEL).

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"Recent weakness in Macau gaming revenue and visitation growth could be partially explained by the visa restrictions and reduction in China UnionPay limits highlighted by the Macau Daily," Cameron McKnight, Wells Fargo & Co. analyst, said in a recent research note. "While expectations have recently moderated, we believe outperformance in the Macau stocks is likely to be limited here."

Gambling revenue in May saw just a 7.3 percent increase, the slowest rate in almost 3 years. According to Bloomberg, visitors from mainland China boosted casino revenues in Macau by 42 percent in 2011. Last year roughly 16 million people visited Macau from mainland China.

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MGM Resorts International holds a 51 percent interest in MGM China Holdings, Limited, which owns the MGM Macau resort and casino. MGM China earned net revenue of $702 million, an 18 percent increase over the prior year quarter, and an operating income of $68 million.

Melco Crown Entertainment is an owner and developer of casino gaming and entertainment resort facilities that are focused on the rapidly expanding gaming market found in Macau. Net revenue for the first quarter of 2012 was $1,026.9 million, representing an increase of approximately 27 percent from $806.6 million for the comparable period in 2011.

The Paragon Report has not been compensated by any of the above-mentioned publicly traded companies. Paragon Report is compensated by other third party organizations for advertising services. We act as an independent research portal and are aware that all investment entails inherent risks. Please view the full disclaimer at: