Macau’s Melco Crown Entertainment has soared to new highs over the last six months and the shares have entered the new year with the highest consensus rating among analysts, according to data compiled by Bloomberg.
American depositary receipts of the Hong Kong-based operator hit a record US$44.97 on January 17. scored a 4.74 among analyst recommendations ranked by Bloomberg on a scale of 1 to 5. Twenty-one out of 23 analysts surveyed by Bloomberg recommend that investors buy the stock.
The joint venture of Lawrence Ho and James Packer is expanding on Cotai with its third resort in the city and is opening a megaresort in Manila this summer in partnership with Philippine property giant Belle Corporation.
Galaxy Entertainment Group and Sands China ranked second and third on Bloomberg’s list as gaming revenue soared 18 percent in Macau last year to surpass US$45 billion. This year is expected to produce a similar double-digit gain. January is on track to grow by at least 17 percent year-on-year, boosted in part by the festivities to mark Chinese New Year, which David Bain, a senior analyst with Sterne Agee in the United States, describes as “a mass-driven event” that could help deliver year-on-year gains for February of at least 20 percent. JP Morgan expects January will close out at MOP31.5 billion (US$3.94 billion).
“Macau has a ton of momentum right now and trends have never been stronger, hence, valuations have never been higher,” said Grant Govertsen, a Macau-based analyst with Union Gaming Group. “In all likelihood, analysts’ estimates for 2014 are still too low.”
Sterne, Agee has chosen Melco Crown as its top gaming pick for a fifth year, raising its 2013 to 2015 annual growth estimates this month. Credit Suisse Group has lifted its price forecast by 19 percent to $50.50. The company’s ADRs are trading at 27 times 12-month forward profit, the highest since September 2011.
Sands China parent Las Vegas Sands, Wynn Macau parent Wynn Resorts and MGM Resorts International, parent of MGM China Holdings, are also among Wall Street’s top picks in the coming year. All three are building multibillion-dollar resorts on Cotai through their Hong Kong-listed operating companies.
