Casino companies operating in Macau were in focus on Monday after it was reported that gaming revenue in the region fell 40% last month compared to the same month of last year. Publicly traded companies in the Macau gaming space include Las Vegas Sands (LVS), MGM Resorts (MGM), Wynn Resorts (WYNN) and Melco Resorts (MLCO).
GAMING DATA: Macau's Gaming Inspection and Coordination Bureau said gross revenue from games of fortune in the region declined 40% 4.365B patacas in October compared to the same month of last year, the lowest monthly number of 2021. This compares to an increase of 165.9% to 5.879B patacas in September compared to the same month of last year and a year-over-year increase of 234% to 4.44B patacas in August. Year-to-date GGR is 72.152B patacas, a 57.3% increase from 45.875B patacas last year.
October revenue fell 26% from the previous month and was down 83% from the pre-pandemic level in 2019.
WHAT'S NOTABLE: While Macau's tighter countermeasures to prevent the spread of Covid-19 were gradually eased between the second half of June and early July, travel restrictions between Macau and mainland China were again increased in late July due to new Covid-19 infections on the mainland. As of midnight on July 31, people intending to enter Macau on a direct flight from mainland China must hold a nucleic acid test certificate issued within 48 hours proving they are negative for Covid-19, and as of August 2, Macau authorities have also added new locations to the list of places where departing travelers must do a 14-day quarantine upon arrival in Macau. According to reports, the daily volume of mainland tourists to Macau went down at the end of September, coinciding with neighboring Zhuhai in Guangdong province introducing a 14-day quarantine for inbound travel from Macau.
Recovery by Macau's casinos was further foiled in October by stricter restrictions imposed by China, the city's biggest source of tourists, after the flareups of Covid-19 in Macau. The quarantine requirement for people entering the mainland from Macau wasn't lifted until October 19. Macau reported just 8,159 visitors during the "Golden Week" holiday, typically a peak travel season, a drop of 95% y/y, according to government data.
LOOKING AHEAD: Hong Kong, the second largest contributor of visitors to Macau, plans to resume a quarantine exemption for arrivals from Macau beginning November 2. At the same time, Macau is maintaining its quarantine requirement for people traveling from Hong Kong. Macau recorded on October 26 a total 28,299 arrivals of visitors, the highest daily figure since late September. The average daily volume of visitor arrivals to Macau “exceeded 25,000” between October 20 and 28, according to a Friday press release from the Macao Government Tourism Office.
Meanwhile, still under consideration is Macau's gaming law. GGR Asia said in September that a public consultation process regarding the revision began September 15 and ran through October 29, while Lei Wai Nong, Macau's Secretary for Economy and Finance, commented that the law includes the "healthy and sustainable development" of the gambling industry through improvements to the regulatory system of casinos, as well as an aim to increase the "competitiveness" of the city's casino industry.
ANALYST COMMENTARY: Bernstein analyst Vitaly Umansky noted that October's results were significantly impacted by the first three week's border closure stemming from Macau's Covid outbreak, and that daily visitation has been recovering and GGR improving since October 19, when Macau resumed quarantine-free travel with mainland China.
PRICE ACTION: In morning trading, shares of Las Vegas Sands were up 3.5%, MGM Resorts shares were up 2.2%, Wynn Resorts shares gained 3.5%, and Melco Resorts shares trading in New York were up 5.5%.
Las Vegas Sands
+1.14 (+2.94%)
MGM Resorts
+0.97 (+2.06%)
Wynn Resorts
+2.51 (+2.79%)
Melco Resorts
+0.54 (+4.99%)