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Macau Gaming Revenues Dip in August: Avoid These 3 Stocks

Harendra Ray
·4-min read

Macau, which is the world’s largest gambling hub, has witnessed decline in casino gross gaming revenue (GGR) in August. Although casinos in Macau have resumed operations following the coronavirus-induced shutdown, casino tables still remain empty. Notably, gaming revenues from the world’s largest gambling hub fell for the 11th consecutive month. Moreover, GGR plunged more than 90% for the fifth straight month.

In August, gaming revenues from Macau nosedived 95% to 1.3 billion patacas ($163.01 million) following a decline of 95% and 97% in July and June, respectively. The downside can primarily be attributed to a declining footfall. Notably, the industry has witnessed only modest increase in the number of gamblers despite easing of quarantine restrictions.

Moreover, in the first eight months of 2020, GGR fell 81.6% year over year to $36.4 billion patacas. In fact, the casino operators in Macau were already grappling with a slowdown in China, the coronavirus pandemic has only aggravated their woes. Per Macau's Statistics and Census Bureau (DSEC) in the first half of 2020, the region witnessed a decline of 83.9% in visitation to the region.

Decline in gambling revenues from Macau is likely to impact companies, including MGM Resorts International MGM, Melco Resorts & Entertainment Limited MLCO, Wynn Resorts, Limited WYNN and Las Vegas Sands Corp. LVS, which generate majority of their revenues from Macau.

Pain to Continue

Increase in travel to Macau in September is likely to boost gaming revenues. The Individual Visit Scheme (IVS) recommenced in late last month for those in the Guangdong province and Zhuhai. IVS will allow residents of mainland China to visit Macau. In 2019, approximately half of Macau visitors were from Guangdong.

However, Macau is likely to record revenue decline in the rest of the year as well. The gambling industry is also suffering in Las Vegas, which is one of the hotspots for gamblers, due to coronavirus outbreak. Although casinos in Las Vegas have resumed operations, traffic is still very low due to the safety protocols and fears related to the pandemic.

Year to date, the industry has declined 17.5%, against the S&P 500’s growth of 3.5%.

 

Stay Away From These Stocks

Shares of Wynn Resorts, Limited are down 37.8% year to date. In the past 30 days, estimates for the current year have been revised downward to a loss of $13.41 from a loss of $11.82. The company currently has a Zacks Rank #4 (Sell).

Shares of Las Vegas Sands have tanked 28.1% year to date. In the past 60 days, estimates for the current year have been revised downward to a loss of $1.48 from a loss of 36 cents. The company currently has a Zacks Rank #4.

Shares of Melco Resorts & Entertainment have plunged 22.3% year to date. The company, which develops, owns, and operates casino gaming and entertainment casino resort facilities in Asia through its subsidiaries, has been impacted by the deadly virus. The Zacks Rank #4 company’s earnings estimates for current year have declined to a loss of $2.35 from a loss of $1.42 in the past 30 days.

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Las Vegas Sands Corp. (LVS) : Free Stock Analysis Report
 
MGM Resorts International (MGM) : Free Stock Analysis Report
 
Wynn Resorts, Limited (WYNN) : Free Stock Analysis Report
 
Melco Resorts Entertainment Limited (MLCO) : Free Stock Analysis Report
 
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