Golden Week was a dud for Macau gambling casino operators, as stricter coronavirus protocols kept many travelers at bay. But some analysts trust Melco Resorts & Entertainment (NASDAQ:MLCO) tin live a comeback story.
Melco stock up has been to a greater extent than cut inwards half from its 52-week luxuriously and is sour 13 percent o'er the past tense month. That’s as investors dumped Macau gaming equities amid heightened regulatory fears inwards the special administrative neighborhood (SAR). However, the shares are higher by nearly 11 percent o'er the past times week, indicating slacken Golden Week visits were widely expected and likely priced into operators’ stocks.
The tightened COVID-19 controls inwards Macau dealt the city’s gaming sector a tough deal during the Oct Golden Week, with day-to-day fair traffic falling 93.7 percent yr over yr to 1,166 visits, which represents only when 0.84 percent of the pre-pandemic 2019 levels,” says Morningstar analyst Jennifer Song. “This, however, was expected, as compulsory quarantine measures are required from Sept. 25, 2021, along with 24-hour electronegative COVID-19 try out results for leaving Macao.”
Melco is the operator of Altria Macau and City of Dreams venues on the Cotai Strip and Manila, among other venues.
Potential Positives for Melco Stock
While Melco doesn’t mastery Macau market place apportion on par with dominant players Las Vegas Sands (NYSE:LVS) and Galaxy Entertainment, the operator is ideally positioned to do good from looser trip controls and expansion inward neighboring regions.
For example, an efficient ramp-up in traffic on the Hong Kong-Zhuhai-Macao Bridge, the curtain raising of the young Hengqin border, and the Gongbei to Hengqin university extension rail would significantly supercharge Macau’s human foot traffic, according to Morningstar’s Song. The analyst adds nearby Hengqin Island, which is three-bagger the size of it of Macau, is experiencing rapid ontogeny of its own, and that could be constructive for Melco stock over the long term.
“One of only when half a dozen grant holders to run casinos in Macao, Melco Resorts is ideally placed to do good from this market dynamic, presumption its portfolio of properties catering to both mass-market and premium-end patrons,” adds Song.
Near-Term Outlook for Melco Stock
For Melco and contender Macau concessionaires, the near- to medium-term outlooks for their stocks revolves largely around the results of the SAR’s interview period, which could direct to a tighter regulatory grip, and efforts to supercharge COVID-19 vaccination rates.
Health officials in that respect said the zero COVID-19 policy will remain inwards come out until 80 percent of citizens get the jab. Close to half of Macau’s universe is fully vaccinated, piece another canton has received at least single dose.
Specific to Melco, the operator is reducing exposure to the often-turbulent VIP segment and could unveil some young offerings inward the future.
“We await the ramp-up of Morpheus, with 800 sumptuousness rooms with 40 new mass gaming tables and 40 tables transferred from other properties, and the estimated opening night of Studio City phase II inwards 2023 to live the next benefit drivers,” concludes Morningstar’s Song.