Casino companies operating in Macau were in focus on Monday after it was reported that gaming revenue in the region plunged over 93% last month amid the ongoing spread of the coronavirus. 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 decreased 93.2% year-over-year to 1.764B patacas. This compares to a 96.8% drop in April to 754M patacas, its worst month on record, and a 79.7% drop in March from a year earlier to 5.257B patacas.
May's weak performance represents the eighth consecutive month of declining revenue. The slump follows a decision by Macau's government to suspend casino operations from February 5 for just over two weeks, as well as continuing quarantines and border restrictions in China. While the pandemic has generally been curbed in mainland China, Macau and Hong Kong, casinos are still facing border and visa restrictions, resulting in losses of more than $1M a day each.
Macau previously said it expects 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. The recovery was also hurt by a 14-day quarantine rule started in China's Guangdong province last week for individuals who arrive at its border checkpoints from Macau, Hong Kong or Taiwan, which analysts said was "effectively the same as a casino shut-down" for Macau. The new rules are intended to minimize further transmission of the COVID-19 coronavirus. Both Hong Kong and Macau imposed similar rules for their own territories in March after reporting spikes in new COVID-19 cases.
ANALYST COMMENTARY: Bernstein analyst Vitaly Umansky said last month that even as restrictions begin to loosen in Macau, there will still be a "clear set of risks" as authorities and health experts worry about a second wave of the coronavirus, protests in Hong Kong and a slow Chinese economic recovery. Umansky weighed in further on Monday, saying that while he expects the cross-border travel to resume in the next few weeks and a phased IVS restart to begin, there continues to be no definitive information from the government on these.
PRICE ACTION: In morning trading, shares of Las Vegas Sands are up 1.25%, MGM Resorts shares are up 4.4%, Wynn Resorts shares rose 2.5%, and Melco Resorts shares trading in New York gained 2%.
