Casino companies operating in Macau were in focus on Tuesday after it was reported that gaming revenue in the region surged 492% last month compared to the same month of last year. 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 gross revenue from games of fortune in the region increased 492.2% to 10.445B patacas in May compared to the same month of last year, the highest yet monthly total of 2021. This compares to a 1,014.4%year-over-year increase in April to 8.4B patacas and a 58% year-over-year increase in March to 8.31B patacas. Year-to-date GGR is 42.487B patacas, a 28.7% increase from 33.004B patacas last year.

WHAT'S NOTABLE:

 Last year, Beijing ramped up travel restrictions to slow the spread of Covid-19. At this time last year, Macau's borders were closed to nearly everyone, with only limited exceptions made for those assisting in the pandemic response.

On February 23 of this year, Macau authorities announced that no city in mainland China was any longer considered by the Macau authorities to be "medium risk" for transmission of COVID-19 infection. Macau has ramped up efforts to promote tourism to mainland residents given that both sides have largely managed to contain the virus, but, the city's government still has tight restrictions for travelers from most spots, including neighboring Hong Kong and Taiwan.

Revenue in May was aided by the five-day Labor Day Golden Week. According to the Macau Government Tourism Office, 167,000 visitors came to Macau during the holiday, with more than 93% from China. Average daily visitor arrivals during the five-day holiday rose 158% compared with the Spring Festival in February and climbed 25% from last month.  

ANALYST COMMENTARY: 

Credit Suisse analyst Kenneth Fong told investors in a May 26 research note that gaming revenue dropped to around 250M patacas a day, 10% lower than April, following Golden Week.

Meanwhile, JPMorgan analyst DS Kim called May's GGR a "respectable print... modestly above consensus." Kim stated that "The daily run-rate has risen sequentially for six consecutive months to the highest post-pandemic print of MOP337 million versus MOP263 million in first-quarter 2021." Stifel analyst Steven Wieczynski said that while May Macau GGR results were slightly better than consensus, he doesn't "believe that really means much" given the continued uncertain backdrop around the market. However, at this point, the analyst believes the worst is behind Macau in terms of virus issues and expects a gradual/slow, steady recovery from here on out.

PRICE ACTION: 

In morning trading, shares of Las Vegas Sands were up 0.7%, MGM Resorts shares were up nearly 1%, Wynn Resorts shares gained 1.3%, and Melco Resorts shares trading in New York were fractionally lower.