By Senad Karaahmetovic
Shares of casino stocks in Macau rose today after Hong Kong authorities said they would relax quarantine requirements for arrivals.
Macau’s Chief Executive Ho Iat-Seng told local media that Macau and mainland Chinese authorities have agreed to resume packaged travel visas. Therefore, tours from Guangdong, Zhejiang, Jiangsu, Fujiang and Shanghai would have priority.
Bloomberg’s basket of Macau gaming stocks is up 11% today. Specifically, Wynn Resorts (NASDAQ:) shares are up nearly 6% on the news, Las Vegas Sands (NYSE:) up 7%, while MGM Resorts (NYSE:) is trading nearly 3% higher in pre-market Monday.
“We see this news as a positive surprise, as the market generally expected little from an easing of travel policy between Macau and mainland China,” a Goldman Sachs analyst told customers.
“With package travel and IVS electronic visa applications also likely to be announced earlier in late October or early November, we see room not only for Sands China, but also for the entire industry to revalue, compared to current trading at 7-9x FY23E EV/ EBITDA.”
A Citi analyst is surprised by the timing, as most investors expected travel restrictions to be eased in early 2023.
“Now that Macau has a clear roadmap to recovery, this neglected sector should regain investor attention. More importantly, this earlier-than-expected easing shows Macau has the full support of the mainland Chinese government for its economic recovery. expect the sector to reassess from current levels, and we maintain our bullish stance on Macau,” the analyst wrote in a research note.