The story out of Macau is much the same for casinos struggling to generate significant traffic due to COVID restrictions. Macau daily revenue for the first eight days of September was 94M patacas a day, per industry estimates. Jefferies said the slight improvement from August was mainly from domestic travel with strict quarantine rules still in place for international visitors.
"We expect this trend to continue into the upcoming Golden Week holiday in October, given recent stricter travel policies, and we expect Macau non-holiday GGR to remain less than 100M patacas a day.
This year will be the third year in a row that Golden Week in October is a disappointment for Macau casinos looking to return to the strong revenue tallies seen for the extended holiday weekend in 2017-2019.
Are there any catalysts in play for Macau casino stocks? Katz and team remind that gaming concession tenders could start to come into focus with investors after Wynn Macau became the first of the existing operators to formally submit its tender for a new gaming concession contract. The other operators are expected to submit ahead of the September 14 deadline with the existing six operators all anticipated to win new 10-year licenses.
The other catalyst to consider is the twice-a-decade Congress being held by the ruling Communist Party of China on October 16. If there is to be a significant change in the COVID policies and rules in China, the election of Xi Jinping for a third term is seen as the potential turning point.
For long-term investors with some patience, Jefferies said it prefers Galaxy Entertainment and Sands China as the best plays amid the uncertain timing and trajectory of the casino revenue recovery.
Macau casino stocks: Wynn Macau (OTCPK:WYNMF), (OTCPK:WYNMY), Wynn Resorts (WYNN), Sands China (OTCPK:SCHYY), (OTCPK:SCHYF), Las Vegas Sands (LVS), MGM China (OTCPK:MCHVF), (OTCPK:MCHVY), MGM Resorts (MGM), Galaxy Entertainment (OTCPK:GXYEF), SJM Holdings (OTCPK:SJMHF), (OTCPK:SJMHY), Melco Resorts & Entertainment (NASDAQ:MLCO ), and Studio City International (MSC).