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Shares of Macau casino stocks are up today after Hong Kong authorities said they would be relaxing quarantine requirements for arrivals.
Ho Iat-Seng, Macau’s Chief Executive, told local media outlets that Macau and Mainland Chinese authorities have agreed to resume packaged tour visas. Accordingly, tours from Guangdong, Zhejiang, Jiangsu, Fujiang, and Shanghai would have a priority.
Bloomberg’s basket of Macau gaming stocks soared 11% today. Specifically, Wynn Resorts (NASDAQ:WYNN) shares are up almost 6% on the news, Las Vegas Sands (NYSE:LVS) over 7%, while MGM Resorts (NYSE:MGM) is trading almost 3% higher in pre-market Monday.
“We see this news as a positive surprise since the market generally had low expectation of travel policy relaxation between Macau and Mainland China,” a Goldman Sachs analyst told clients.
“Now that packaged tours and electronic IVS visa applications may also be announced earlier in late Oct or early Nov, we see scope not only for Sands China but also the entire sector to re-rate, vs currently trading at 7-9x FY23E EV/EBITDA.”
A Citi analyst is surprised by the timing as most investors were expecting the easing of travel restrictions to take place in early 2023.
“Now that Macau has a clear roadmap to recovery, this neglected sector should recapture investors’ attention. More important, this earlier-than-expected easing shows that Macau has full support from the Mainland Chinese government on its economic recovery. We expect the sector to re-rate from the current levels, and we maintain our bullish stance on Macau,” the analyst wrote in a research note.
