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Gross gaming revenue in Macau fell 56% year-over-year in December to 3.48B patacas ($433M) to slightly miss the consensus estimate for a 57% drop, according to the Gaming Inspection and Coordination Bureau. The December tally was up 16% from the GGR mark for November with traffic trends improved on a sequential basis.
For the full year, gross gaming revenue in Macau was down 51% to 42.2B patacas with China’s zero-tolerance COVID policies, travel restrictions, and regional lockdowns all major factor.
Looking ahead, analysts are optimistic that 2023 will see a major break higher in GGR with Macau ending quarantine for overseas arrivals and Mainland visitation expected to rebound. Bank of America noted that China took its travel history tracking system offline and has stopped releasing the number of total COVID infections as the data became less indicative given the absence of mass PCR testing. A general view is that casino operators with a higher exposure to the mass market will see stronger growth rates in 2023 than the VIP-heavy operators. “We think there is more room for recovery, particularly within Mass GGR in 2023 (when we think GGR can approximate 60% of 2019 levels) and improving further in 2024 (to 90% of 2019 levels),” noted JPMorgan analyst Joseph Greff. Overall, the firm sees Macau stocks as excellent plays on China reopening and singled out Las Vegas Sands (NYSE:LVS), Wynn Resorts (WYNN) and Melco Resorts (MLCO) as top picks. On a valuation basis, Macau gaming stocks trade at 11X 2024 EV/EBITDA estimates to mark a discount to the historical average of 13X.
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 (MLCO), Studio City International (MSC).
Studio City International (MSC) has the most trading momentum in the sector with a 156% jump over the last six weeks.
Melco Resorts & Entertainment (MLCO) has the highest Seeking Alpha Quant Rating score at 3.38.
MGM Resorts (MGM) has the highest consensus rating from Seeking Alpha authors.