Macau Casino Stocks Soar After Positive Revenue Trend Update

Macau casino stocks surged after J.P. Morgan updated gross gaming revenue trends, estimating stable revenue of 12.5B patacas for April. Wynn Macau, MGM China Holdings, and SJM Holdings are expected to show strong growth, while Sands China, Galaxy Entertainment Group, and Melco Resorts are anticipated to experience a pull-back. Analysts anticipate further normalization of the market towards pre-COVID levels, with the next major holiday being the Labor Day event from May 1-5. Macau's gross gaming revenue in March increased by 53% year-over-year, surpassing consensus estimates, and the report for April will be released on May 1. In U.S. trading, Las Vegas Sands, Wynn Resorts, and Melco Resorts & Entertainment all experienced gains at the start of the week.

Key Takeaways

• Macau casino stocks surged after J.P. Morgan's stable estimate of 12.5B patacas ($1.5B) gross gaming revenue for April.
• Wynn Macau, MGM China Holdings, and SJM Holdings expected to exhibit strong double-digit EBITDA growth.
• Sands China, Galaxy Entertainment Group, and Melco Resorts & Entertainment anticipated to experience a sequential pull-back in EBITDA.
• Jefferies anticipates further normalization of the Macau market towards pre-COVID trends, with peaks during holidays and troughs before and after holidays.
• Macau's gross gaming revenue in March increased by 53% year-over-year to 19.5B patacas ($2.4B), surpassing consensus estimates by 4%.

Analysis

Macau casino stocks surged due to J.P. Morgan's stable revenue estimate and the anticipation of strong growth for selected companies. The expected pull-back for others is indicative of a shift in market dynamics. The normalization trend towards pre-COVID levels suggests potential opportunities for the mentioned companies. Short-term consequences may include stock price fluctuations, while long-term impacts could be influenced by sustained market trends. Wynn Macau, MGM China Holdings, SJM Holdings, Sands China, Galaxy Entertainment Group, and Melco Resorts are among the organizations affected. The implications of the Labor Day event on May 1-5, and the subsequent market response, will be key indicators for future developments in Macau's gaming industry.

Did You Know?

• EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company's operating performance and is often used to analyze and compare profitability between companies and industries.
• Gross Gaming Revenue: The total amount of money wagered in a casino before deducting the costs of operation. It is a key financial metric for the casino industry and is used to assess the health and performance of a casino operation.
• Normalization of the Market: Refers to the process of returning to typical or standard market conditions, usually after experiencing a period of disruption or irregularity. In the context of the news article, normalization refers to the expected return of Macau's gaming market to pre-COVID levels.