Casino companies operating in Macau were in focus on Monday after it was reported that gaming revenue in the region fell just over 65.8% last month, the smallest year-over-year drop since January 2020. 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 December gross revenue from games of fortune in the region decreased 68.5% year-over-year to 7.82B patacas. This compares to a 70.5% drop in November to 6.75B patacas and a 72.5% decline in October to 7.27B patacas.

The aggregate of Macau casino GGR for 2020 stood at 60.44B patacas, a contraction of 79.3% year-over-year.

Macau previously said it expected a drop of 56% in annual gross gaming revenue this year to 130B patacas, down from 260B patacas forecast last year.

WHAT'S NOTABLE: 

The December GGR figure comes after China reinstated the Individual Visit Scheme, or IVS, for residents of Zhuhai from August 12, all of Guangdong Province from 26 August and all of mainland China from September 23. October's Golden Week in China was eagerly anticipated by the industry as a possible boost to Macau’s post-COVID GGR recovery but was generally considered disappointing by experts, with visitation down 85.7% year-over-year.

According to reports, the improvement in December from recent months was the result of larger numbers of visitors to Macau, at an average of just over 24,500 per day towards the end of the month. Macau hasn't reported a new COVID-19 case in over six months, but travel to the region remains difficult amid a new variant strain of COVID-19 that recently emerged in the UK and now detected in Japan.

ANALYST COMMENTARY:

 Bernstein analyst Vitaly Umansky said December GGR was "as expected," and that while business and visitation picked up around Christmas, the month was still weaker than initially hoped. The month continued to be negatively impacted by visitation bottlenecks due to visa processing and COVID test requirements and by weakness in VIP volumes, Umansky said. The analyst predicts January GGR will be down in the low- to mid-60% range.

Meanwhile, JP Morgan analysts said that the increased foot traffic in Macau between December 23 and December 27 should not mislead investors to think that things are all working themselves out in Macau just yet.

PRICE ACTION: In morning trading, shares of Las Vegas Sands were down 2.1%, MGM Resorts shares were down 4%, Wynn Resorts shares dropped 4.4%, and Melco Resorts shares trading in New York declined 2.7%.