Macau gaming stocks hit yearly lows despite revenues rebounding to pre-Covid levels

Macau's gaming stocks have hit their lowest points since the region reopened earlier this year. Despite a rebound in revenues and profits towards pre-COVID levels since Macau's borders reopened on January 8, the stock prices of almost all gaming stocks have taken a downturn in December.

In an unexpected turn for Macau's recovery narrative, the stock values of five out of the six concessionaires have dropped by more than 20% compared to January 1, 2023 - a week before the border reopening.

Among the six casino operators listed on Hong Kong's stock exchange, MGM China Holdings is the only one to see an increase, rising by 1% between January 1 and December 4, according to an analysis by industry consultancy firm 2NT8, as per a report by Macau Business.

SJM Holdings has witnessed the steepest decline, down by 48%, followed by Melco Resorts & Entertainment, with a 38% plunge. Galaxy Entertainment Group and Sands China have experienced falls of 21% and 22%, respectively, while Wynn Macau slipped by 32%.

“This performance contrasts with the actual performance of the casinos, as revenues and profits have been steadily rising,” Alidad Tash, Managing Director of 2NT8, was quoted as saying in the report.

According to data released by the Gaming Inspection and Coordination Bureau, Macau’s gaming revenue for November receded to MOP16.04 billion ($2 billion), down on a monthly basis but up 435% compared to the same period of the previous year. While November's GGR was some 17.7% behind the $19.50 billion posted in October 2023, the month still marked the fourth-highest monthly total so far in the year.

With the November figure taken into consideration, the first 11 months of the year saw a total of MOP164.49 billion ($20.44 billion) in gross gaming revenue, up 324.9% year on year and about 61% compared to the 2019 level. All in all, Macau seems to be experiencing a rebound, even if stocks do not seem to reflect that.

Despite the absence of an obvious reason for the drop in gaming stocks, analysts point to the possibility of fear regarding a slowdown in China, particularly concerning non-essential spending such as luxury items, gaming, and leisure.

Recently, JP Morgan analysts also expressed surprise at the performance of Macau stocks, noting that the combined market capitalization of the six concessionaires has regressed to the same level as a year ago and it is at only half of pre-COVID levels.