Despite a pair of recent typhoon strikes, gaming revenue in Macau rose 20.4% year on year in August, ushering in the second year of recovery for the world’s casino capital. While casino take has mounted in recent months, so have concerns in some quarters, and investor enthusiasm has waned for Macau stocks has waned. But second quarter earnings and continued 20%-plus gaming revenue growth have Morgan Stanley forecasting a cycle of consensus earnings revisions and individual stock upgrades now underway.

August revenue totaled 22.7 billion Macau patacas (MOP; US$2.8 billion). It’s the fourth straight month of 20%-plus growth and the 13^th consecutive month of year on year increases following a 26-month losing streak. For this year, casino revenue is up 19.1%, tracking for a 2017 total of US$33.2 billion, an increase of US$5.3 billion. Yet, Macau share prices underperformed Hong Kong’s Hang Seng Index over the summer, after a big jump early this year.

Questions about Macau’s recovery stem in part from key elements of the rebound. In the second quarter, VIP revenue grew faster than mass revenue, 30.8% to 14.8%, for the first time since the third quarter of 2011, according to numbers reported by operators, as compiled by Union Gaming in Macau, figures believed to more reliable than the Macau government’s reports. Gaming regulator DICJ’s figures show a bigger disparity, with VIP growth surpassing mass since the fourth quarter of last year. Union Gaming Managing Director Grant Govertsen cites operator figures to show mass market continues to account for the majority of gaming revenue, as it has since the third quarter of 2015, and calls the current situation “a mass-anchored recovery.”

Nevertheless, a strengthening VIP sector, highlighted by the revival of numerous junket rooms shuttered as the sector consolidated and credit tightened from mid-2014, raises sustainability questions on the economic and political fronts. The just reversed gaming revenue crash can be traced to President Xi Jinping’s anti-corruption crackdown, while Beijing and Macau authorities urge a turn toward tourism and leisure customers rather than hardcore gamblers.

VIP gaming is a low-margin business that can crowd out higher margin mass opportunities. Notably, as Parisian Macao approaches its first anniversary – ‘tis the anniversary season for Sheldon Adelson properties – the intended mass market resort is reportedly reducing its room count to create accommodation better suited to premium guests.

Diminishing returns of the new properties are another looming issue. Parisian, Steve Wynn’s Wynn Palace and Melco Resort’s Studio City are all showing an annual return on investment well below the industry’s 20% benchmark. Investment manager and adviser David Bonnet of Delta State Holdings notes that their payback periods exceed the remaining time on those companies’ gaming concessions. That can unsettle investors.

But second quarter reports from the operators have moved these concerns to the back burner. Luck adjusted Ebitda rose 29% year on year, according to JP Morgan, better than the period’s 21% gaming revenue growth and margins held steady from the first quarter at 24.3%, a full percentage point better than the fourth quarter of last year.

Two weeks ago, Morgan Stanley analysts Praveen Choudhary, Alex Poon and Thomas Allen upgraded MGM China, scheduled to open its Cotai property later this year, and forecast consensus earnings revisions for Galaxy Entertainment and Wynn Macau. Morningstar’s Chelsey Tam upgraded Galaxy on September 1. JP Morgan analysts DS Kim and Sean Zhuang made Wynn their top pick as they upgraded Macau gaming overall.

Typhoons aside, JP Morgan sees favorable current trends, including continued mass expansion supporting Ebitda growth, a potential boost from the bridge to Hong Kong that could open by year’s end, plus possible steps to ease travel throughout the delta region. Add that to low investor expectations and Macau gaming sits in a sweet spot. It remains to be seen whether operators can take advantage to address long term issues or remain content to grab the low hanging fruit.