Casino companies operating in Macau were in focus on Thursday after it was reported that gaming revenue in the region plunged 90% last month, the sixth straight month of declines of at least 90%, as a gradual relaxation of travel and visa curbs by China has brought few visitors so far.
GAMING DATA: Macau's Gaming Inspection and Coordination Bureau said gross revenue from games of fortune in the region decreased 90% year-over-year to 2.21B patacas. This compares to a 94.5% drop in August to 1.33B patacas and a 94.5% decline in July to 1.34B patacas.
The slump follows a decision by Macau's government to suspend casino operations in February for just over two weeks, as well as continuing quarantines and border restrictions in China.
Macau previously said it expected a drop of 56% in annual gross gaming revenue this year to 130B patacas, down from 260B patacas forecast last year.
CORONAVIRUS IMPACT: The coronavirus is another setback for the gaming hub after a disappointing 2019 was weighed down by the trade war, Hong Kong protests, a crackdown on online gaming and a slowing Chinese economy. Macau's government also decided to suspend casino operations from February 5 for just over two weeks, dealing another blow to the gambling hub. Even after the partial resumption of business around February 20, China continued to halt individual and group visas to Macau and restrict transportation in a prolonged fight against the spread of COVID-19. Macau's government draws up to 80% of its revenue from the gaming sector.
While 80% of the gaming tables had reopened by mid-March, there were few visitors as China continued its freeze on individual and group visas as part of virus-containment measures. Visitors from the Greater China region account for more than 90% of tourists to Macau. However, China is gradually easing some of its restrictions. In mid-July, the Guangdong province lifted quarantine requirements for travelers returning from neighboring Macau.
September's result came after China reinstated the Individual Visit Scheme for residents of Zhuhai beginning August 12, all of Guangdong Province from August 26 and all of mainland China from September 23. The first IVS applications for Guangdong residents were approved on September 1. Casino floors have remained largely empty as inconvenient requirements still make it difficult to enter Macau from the mainland, such as obtaining a negative virus test.
Macau also faces challenges as China is tightening controls on outbound capital flow.
ANALYST COMMENTARY: Bernstein analyst Vitaly Umansky said the year-over-year performance had been "weaker than expected," negatively affected by a "soft... ramp" in terms of growth of visitor volume to Macau, and "concerns over money flows" to the city’s gambling market. September saw "weaker than expected" visitor volume from neighboring Guangdong province, "on the back of visa restart in late August," Umansky said.
Meanwhile, Morgan Stanley analyst Praveen K. Choudhary said September's visitation was just 24% of the 2019 level, but implies that roughly 50% of Guangdong visitation came back after Guangdong IVS resumed on Augist 26. The analyst expects visitations and GGR should recover together from here and sees a surge in the October Golden Week holiday.
PRICE ACTION: In morning trading, shares of Las Vegas Sands are down 0.3%, MGM Resorts shares are up 0.6%, Wynn Resorts shares gained 0.3%, and Melco Resorts shares trading in New York fell 0.2%.
Las Vegas Sands
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MGM Resorts
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Wynn Resorts
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Melco Resorts
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