Macau casino stocks have lost as much as half their value over the past year as China's anti-corruption crackdown scares away wealthy VIP punters, but some investors say their faith in long-term gambling demand from the mainland remains unshaken.
Casino revenues for the world's biggest gambling hub are expected to slide in April for an 11th straight month. Industry moguls like Wynn Resorts' Steve Wynn and Las Vegas Sands' Sheldon Adelson have noted the unprecedented nature of the decline and a highly uncertain near-term outlook.
High rollers now account for around 60 percent of Macau's gambling revenue, down from 80 percent two years ago. Among Hong Kong-listed stocks, those hit hardest include SJM Holdings which has fallen 54 percent over the past year while Wynn Macau has tumbled 45 percent.
But those taking the longer view point out that less than 2 percent of China's 1.4 billion people have visited Macau, the only place in the country where casino gambling is legal, and that a planned extension of a high speed rail network will slash travel time to the enclave in the coming years. Development of a neighbouring island will also help boost visitors.
"What is the worst that could happen? Stocks go down before they go up. But they will go up. We are preparing for a 100 percent increase in share prices within the next three years," said Matthew Ossolinski, chairman of Ossolinski Holdings, a global emerging markets fund that invests in casinos and other gambling-related companies.
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He said he has launched a new fund to take advantage of current stock prices for Macau casino plays - now trading at near 52 week lows for price-to-earnings ratios.
Galaxy, with a market value of $21 billion (£13.87 billion), will double its presence with the opening of a new multi-billion dollar casino in May, while Sands China's casinos have been designed to cater to ordinary punters who are expected drive future growth.
Macau's capacity expansion will also not stop with the new Galaxy casino. Melco Crown Entertainment (6883.HK), owned by Hong Kong billionaire Lawrence Ho and Australian tycoon James Packer, is set to open a film-themed casino resort this year and another three casinos will open in 2016 - developments widely seen as helping unleash pent-up demand.
Michele Matsuda, an asset manager at Hong Kong-based SI Management, says this year will mark the start of Macau's transition to a gambling mecca with a wider appeal to ordinary gamblers, citing the industry's greater investment in fancier restaurants, shops and shows.
"It is a better balance of non-gaming revenue and as an investment will be much more balanced going forward," he said.
"Now certain stocks are really cheap; other people might have missed it a couple of weeks ago. Now is a good time to see if you want to put capital behind it."