Written by Sinad Karahimetovic
Shares of Macau casinos rose today after Hong Kong authorities said they would ease quarantine requirements for arrivals.
Ho Iat Singh, chief executive of Macau, told local media that the authorities of Macau and mainland China have agreed to resume filled-in tourist visas. Accordingly, tours from Guangdong, Zhejiang, Jiangsu, Fujiang and Shanghai will have priority.
Bloomberg’s basket of Macau gaming stocks is up 11% today. Specifically, shares of Wynn Resorts (NASDAQ 🙂 rose nearly 6% on the news, Las Vegas Sands (NYSE: over 7%, while MGM Resorts (NYSE:) is trading nearly 3% higher in pre-market Monday.
“We see this news as a positive surprise because the market in general has low expectations of an easing of travel policy between Macau and mainland China,” an analyst at Goldman Sachs told clients.
“Now that the combined rounds and e-IVS visa applications were also announced earlier in late October or early November, we see scope for not only Sands China but also the entire sector to reassess, versus currently trading at 7-9x FY23E EV/EBITDA. “
A Citi analyst was surprised by the timing as most investors were expecting an easing of travel restrictions in early 2023.
“Now that Macao has a clear roadmap for recovery, this neglected sector must regain the attention of investors. More importantly, this earlier than expected easing shows that Macao has the full support of the Chinese mainland government in terms of economic recovery We expect this sector to re-evaluate from current levels, and we maintain our bullish stance in Macau,” the analyst wrote in a research note.