Macau Concessionaires Facing ‘Significant Risks,’ Says Moody’s

On the heels of tidings that Macau is extending the temporary gag rule of casinos past another 5 days, it’s safe to say concessionaires in that respect human face considerable in operation(p) risk.

The unexampled restrictions touch the special administrative region’s back around of gambling casino closures since the onset of the coronavirus pandemic. As a result, analysts panorama the thirdly billet as a missed reason for operators and are forecasting relax revenue figures from mass securities industry players.

We estimate receipts gaming revenue (GGR) for the mass section — the Florida key contributor to gaming operators’ benefit and cash in flux — will weaken to 30% of 2019 levels this year, before improving to 70% in 2023. We await a replete(p) retrieval inward the mass section only if in 2024, which will lead to a substantial melioration in the gaming operators’ credit metrics,” said Moody’s Investors Service in a new report.

Further straining Macau operators is the dot that a retrieval in VIP betting is unlikely due to closures of junkets that serviced the SAR. The vi Macau concessionaires are Galaxy Entertainment, Las Vegas Sands (NYSE:LVS), Melco Resorts & Entertainment (NASDAQ:MLCO), MGM Resorts International (NYSE:MGM), SJM Holdings, and Wynn Resorts (NASDAQ:WYNN).

For Macau Concessionaires, Geography Matters

With the Macau recovery timeline consistently lengthening, geographics matters for operators. Said another way, the more various their holding portfolios are, the better.

SJM Holdings has a Macau-only presence, perhaps explaining why that operator is universally viewed as the most financially imperiled of the cassino companies there.

Among US companies that don’t green goods semiconductors, LVS and Wynn are among the most qualified on PRC (Macau) for revenue. With the casino hub essentially a wraith town, for the time being, Sands is progressively strung-out on Marina Bay Sands inwards Singapore, piece Wynn needs to wrench to a greater extent upside out of its US venues inwards Bean Town and Las Vegas.

“MGM is the to the highest degree insulated from continued weakness in the Macao gaming market because of the strong recovery in its extensive US operations,” adds Moody’s. “SJM is extremely exposed, not only if because of its exclusive footmark in Macao but also because high operating expenses are impulsive EBITDA negative, which can farther growth debt and weaken both liquidity and great structure.”

Slow Recovery Problematic

Nearly vii months into 2022, it’s comely illuminate that blackball a miracle, Macau’s retrieval testament follow set away until 2023, and that’s a best-case scenario.

“It could come mainly because of continued travel restrictions and business organization closures amid the resurgence of the pandemic. In this downside scenario, we take mass GGR will homecoming to only if 60% of pre-pandemic levels in 2023 and 80% inwards 2024. As a result, course credit metrics of Macao-focused operators will remain rattling weak till 2024, and their ratings will follow below heightened pressure,” concludes Moody’s

In a remark to clients today, Morgan Stanley upgraded Wynn Macau to “overweight” from “equal-weight” spell reiterating an “overweight” rating on Sands China. The cant rates MGM China “equal-weight.”

Those are the Macau arms of the triad to a higher place of US-based gaming companies.

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