Australian Investment Blog

Morning Report 19/06/2014

Morning Report Thursday 19 June 2014

Are Gaming stocks losing their lustre as Macau VIP gaming struggles - an opportunity?

An article by a large US merchant bank recently highlighted the potential structural saturation among the high rollers in Macau. Macau has been contributing over 80% of Asia’s “VIP roll,” but other Asian destinations are threatening this dominance by simply offering better junket commissions. Somebody is always getting paid around casinos and the “backhand” style” commission levels not surprisingly determine where organisers recommend their punter travels. Combining this with concerns around the overall Chinese economy is clearly worrisome, but conversely the Macau exposed stocks have been hammered recently. When news & analyst reports cross my desk after large stock corrections I look for contrarian opportunities; most company reports tend to follow pack mentality, nobody discussed these concerns when Crown (CWN) was trading $3 higher in January this year. As is usually the way the worst is starting to be factored into the gaming stocks around the world with Macau exposure. My thoughts around the 2 Australian casino stocks:

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