Shares of casino companies with operations in Macau rose on Monday after the city’s government said it would ease restrictions for visitors from mainland China, boosting hopes for an accelerated recovery for the city’s tourism-dependent economy.
The casino sector’s gains came after news over the weekend that Macau expects to resume issuing electronic visas and allowing Chinese group tours to visit the gambling hub as soon as late October. Analysts said that timeline could facilitate a faster-than-expected return of Chinese visitors to Macau.
Shares of U.S. casino operators have swung wildly over the last couple of years following updates to Macau’s Covid-containment policies, a sign of how some U.S.-based gambling companies rely on operations in the former Portuguese colony. In 2019, Macau supplied nearly 70% of revenue for
Las Vegas Sands Corp.
LVS 11.81%
and
Wynn Resorts Ltd.
WYNN 11.99%
Macau, which has a population of about 650,000, has maintained strict containment measures throughout the pandemic. At one point, quarantine for travelers from what it deemed very high-risk countries was as long as 28 days.
Casino operators in Macau were hit with another complication earlier this month, when an affiliate of
Genting Group,
headed by a Malaysian billionaire, submitted an unexpected last-minute bid for one of the six 10-year casino licenses up for grabs.
The bid by the Genting-linked GMM Ltd. has shaken up competition for existing license-holders, including Las Vegas Sands, Wynn Resorts and
MGM Resorts International,
which had been expected by analysts to receive renewals.
Las Vegas Sands, which owns several properties in Macau through its subsidiary
Sands China Ltd.
, rose 12% Monday. Monday’s gains reversed the stock’s losses for the year, and shares are now up about 5% in 2022.
Shares of Wynn Resorts also rose about 12%. The stock was the best performer in the S&P 500 during morning trading. Shares are down around 20% in 2022, outperforming the S&P 500’s decline of over 22% over that same period.
Shares of Wynn Resorts were the best performer in the S&P 500 during morning trading.
Photo:
Justin Chin/Bloomberg News
Hong Kong-based
Melco Resorts & Entertainment Ltd.
, which operates casinos and hotels in Macau and the Philippines, got a lift, too, with Nasdaq-listed American depositary shares rising 25%.
Shares of MGM Resorts International, which relies more on its U.S. properties for revenue, rose 1.3%. MGM shares are down 32% so far this year.
JPMorgan
said Macau’s latest Covid-19 announcement was the most significant easing since Macau’s border with China reopened two years ago. The move should “alleviate friction for a Macau trip, as well as signal to many that it’s OK to visit Macau,” JPMorgan analyst D.S. Kim said in a research report.
Mr. Kim said the lack of electronic visas has been the “most common pushback we heard,” and noted that group tours used to account for about 25% of Chinese visitors to the city before the pandemic.
“Now that Macau has a clear road map to recovery, this neglected sector should recapture investors’ attention,”
Citigroup
analysts said. They added that this shows Beijing fully supports Macau’s economic recovery.
Both Citigroup and JPMorgan have a bullish stance on the sector.
Citi’s
top picks are Sands China and
Galaxy Entertainment Group Ltd.
, while JPMorgan’s top pick is Sands China.
Some other analysts are more cautious. The gambling hub’s “pace of recovery [is] still uncertain,” Jefferies analyst
Andrew Lee
said in a research note. Meanwhile, “quarantine fears continue to deter overseas travel given China’s rapid lockdowns strategy during new local infection cases,” Mr. Lee added.
Jefferies projected that gambling revenue in 2022 will only be 14% of prepandemic levels, with revenue improving further to 46% of prepandemic levels in 2023.
—Clarence Leong contributed to this article.
Write to Will Feuer at Will.Feuer@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Shares of casino companies with operations in Macau rose on Monday after the city’s government said it would ease restrictions for visitors from mainland China, boosting hopes for an accelerated recovery for the city’s tourism-dependent economy.
The casino sector’s gains came after news over the weekend that Macau expects to resume issuing electronic visas and allowing Chinese group tours to visit the gambling hub as soon as late October. Analysts said that timeline could facilitate a faster-than-expected return of Chinese visitors to Macau.
Shares of U.S. casino operators have swung wildly over the last couple of years following updates to Macau’s Covid-containment policies, a sign of how some U.S.-based gambling companies rely on operations in the former Portuguese colony. In 2019, Macau supplied nearly 70% of revenue for
Las Vegas Sands Corp.
LVS 11.81%
and
Wynn Resorts Ltd.
WYNN 11.99%
Macau, which has a population of about 650,000, has maintained strict containment measures throughout the pandemic. At one point, quarantine for travelers from what it deemed very high-risk countries was as long as 28 days.
Casino operators in Macau were hit with another complication earlier this month, when an affiliate of
Genting Group,
headed by a Malaysian billionaire, submitted an unexpected last-minute bid for one of the six 10-year casino licenses up for grabs.
The bid by the Genting-linked GMM Ltd. has shaken up competition for existing license-holders, including Las Vegas Sands, Wynn Resorts and
MGM Resorts International,
which had been expected by analysts to receive renewals.
Las Vegas Sands, which owns several properties in Macau through its subsidiary
Sands China Ltd.
, rose 12% Monday. Monday’s gains reversed the stock’s losses for the year, and shares are now up about 5% in 2022.
Shares of Wynn Resorts also rose about 12%. The stock was the best performer in the S&P 500 during morning trading. Shares are down around 20% in 2022, outperforming the S&P 500’s decline of over 22% over that same period.
Shares of Wynn Resorts were the best performer in the S&P 500 during morning trading.
Photo:
Justin Chin/Bloomberg News
Hong Kong-based
Melco Resorts & Entertainment Ltd.
, which operates casinos and hotels in Macau and the Philippines, got a lift, too, with Nasdaq-listed American depositary shares rising 25%.
Shares of MGM Resorts International, which relies more on its U.S. properties for revenue, rose 1.3%. MGM shares are down 32% so far this year.
JPMorgan
said Macau’s latest Covid-19 announcement was the most significant easing since Macau’s border with China reopened two years ago. The move should “alleviate friction for a Macau trip, as well as signal to many that it’s OK to visit Macau,” JPMorgan analyst D.S. Kim said in a research report.
Mr. Kim said the lack of electronic visas has been the “most common pushback we heard,” and noted that group tours used to account for about 25% of Chinese visitors to the city before the pandemic.
“Now that Macau has a clear road map to recovery, this neglected sector should recapture investors’ attention,”
Citigroup
analysts said. They added that this shows Beijing fully supports Macau’s economic recovery.
Both Citigroup and JPMorgan have a bullish stance on the sector.
Citi’s
top picks are Sands China and
Galaxy Entertainment Group Ltd.
, while JPMorgan’s top pick is Sands China.
Some other analysts are more cautious. The gambling hub’s “pace of recovery [is] still uncertain,” Jefferies analyst
Andrew Lee
said in a research note. Meanwhile, “quarantine fears continue to deter overseas travel given China’s rapid lockdowns strategy during new local infection cases,” Mr. Lee added.
Jefferies projected that gambling revenue in 2022 will only be 14% of prepandemic levels, with revenue improving further to 46% of prepandemic levels in 2023.
—Clarence Leong contributed to this article.
Write to Will Feuer at Will.Feuer@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8