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Analyst sees recovery for US-based casino operators in Macau

Gaming tax collection in November was up 203% month-on-month.
Gaming tax collection in November was up 203% month-on-month.

For Stifel analyst Steven Wieczynski, the stock prices for Wynn, Las Vegas Sands and MGM have room to grow in 2021.

Macau.- Financial analysts expect the stock of the main US-based casino operators in Macau to begin 2021 with steady growth.

For Stifel analyst Steven Wieczynski, the recovery of the largest casino hub in the world is not a question of “if” but “when”.

He said: “While the recovery time line around Macau remains an unknown, we continue to believe in the long-term resiliency of the market, and believe it’s a matter of when, not if, the market returns to normal/accelerated levels.”

Wieczynski noted the Macau market is not only impacted by travel restrictions due to the Covid-19 pandemic but also by China’s recent crusade against the outflow of gambling funds.

In spite of those challenges, analysts at Stifel believe mass and premium mass gamblers will soon get Macau’s motors running again.

Evidence has been sen in the recent increase in gaming tax income. The SAR collected MOP2.83bn (US$354.6m) in gaming tax revenue in November, a jump of 203 per cent from October.

For January through November, the authorities collected only MOP27.2bn (US$3.4bn). That represents a fall of 73.9 per cent from MOP104bn (US$13bn) in the same 11 months in 2019.

In that context, Wieczynski sees a potential increase in casino stock prices.

He said: “Still, shares of LVS, MGM and Wynn are lower by an average of almost 13 per cent year-to-date, while the S&P 500 is higher by 14.7 per cent. That scenario could imply the US-based Macau operators have room to run in 2021.

“We believe consensus estimates are reasonable and this, in turn, should allow investors to get more comfortable with Macau-centric names, as they won’t have to endure multiple negative estimate reductions moving forward.”

He also believes new money will pour into the US-based casino stocks: “From here, we expect to witness sequential improvements in the Macau market, which should drive investor interest higher in the near-term.”

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