The statistical ratings firm said it now expects Macau gaming revenue to decline between 33% and 34% in 2015, down from its previous forecast of a 29% decline.
Fitch Ratings said that gaming revenues in Macau are down 36.5% year to date through August, which reflects on the difficult first-half 2014 comparison, and pressures such as corruption crackdown in China that took a toll on gaming.
The ratings firm said that Macau's decision to loosen its visa restrictions "should produce some positive benefit, underscoring that Macau is willing to use certain levers to prop up its gaming-centric economy."
Fitch Ratings said it expects Macau gaming growth in 2016 to be "relatively flat," citing the positive impact of new properties opening in the region next year.
The lower 2015 Macau gaming revenue forecast helped bring down shares of casino operators with properties in the region, including Melco Crown Entertainment.
Separately, TheStreet Ratings team rates MELCO CROWN ENTMT LTD as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate MELCO CROWN ENTMT LTD (MPEL) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is somewhat low, currently at 0.99, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 2.64, which clearly demonstrates the ability to cover short-term cash needs.
- MPEL, with its decline in revenue, underperformed when compared the industry average of 4.1%. Since the same quarter one year prior, revenues fell by 23.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, MELCO CROWN ENTMT LTD's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- MELCO CROWN ENTMT LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, MELCO CROWN ENTMT LTD reported lower earnings of $1.10 versus $1.15 in the prior year. For the next year, the market is expecting a contraction of 46.8% in earnings ($0.59 versus $1.10).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 83.1% when compared to the same quarter one year ago, falling from $143.64 million to $24.25 million.
- You can view the full analysis from the report here: MPEL