Shares of Melco International Development Co. (200), the Macau casino operator, surged after Credit Suisse revised its earnings forecast on the company's purchase of a gaming-technology provider.
The stock rose 6 percent to close at HK$11.54 in Hong Kong today, cutting its loss this year to 37 percent. The gain was its biggest in 10 weeks.
Elixir Group, a wholly owned unit of Melco, said on June 15 it will buy a controlling stake in VendingData Corp. in return for providing services and slot machines. The deal could worth as much as $261.6 million, according to Melco.
The acquisition ``will offer some meaningful net asset value enhancement to Melco,'' Credit Suisse's Hong Kong-based Gabriel Chan wrote in a note published today. Chan has an ``outperform'' rating on the company with a target price of HK$19.50.
Melco, controlled by billionaire Stanley Ho's son Lawrence Ho, is expanding its slot machine and technology business to tap Asia's gambling market. The company has a casino venture with Publishing & Broadcasting Ltd., which is controlled by James Packer, Australia's richest man.
``We believe this is part of the strategy to expand Melco's gaming portfolio outside casino gaming in Macau,'' Chan wrote.
The number of slot machines in Asia may double to 74,000 in the next five to seven years, Elixir Chief Executive Officer Joe Pisano said last week.
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