Macau Casino Stocks Plummet, Presenting Potential Investment Opportunity


In the wake of concerns surrounding China’s economic downturn and the temporary shuttering of gaming centers due to a cyclone, Macau casino shares have suffered a downward trajectory from early August. However, one analyst posits that these stocks have reached a potentially advantageous stage worthy of renewed scrutiny.

As divulged in a fresh briefing to clients, financial advisor Steven Wieczynski suggests that anxiety surrounding the floundering state of China’s economy – ranked second globally after the United States – have been factored into the current cost of Macau operator shares. He opines that this implies the possible emergence of attractive valuation opportunities.

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High latent demand persists, leading Wieczynski to anticipate that the forthcoming Golden Week Holiday in late September to early October will validate this presumption. “Macau-centric stocks are a tantalizing prospect, with share values aligning at over 25% less than typical trading parameters,” he posited.

Las Vegas Sands and Wynn Resorts, two U.S. based concessionaires in Macau, have been registering a slump since the previous month. Their shares have declined more than 15% and 4.7% respectively within this period.

Wieczynski trimmed price estimates for Sands and Wynn to $69 and $135 respectively. However, both these adjustments project a sizeable growth potential. As of today, Wynn concluded at $91.56 while Sands concluded at $45.79.

Both corporations stand to profit as this year’s Macau gross gaming revenue (GGR) approaches pre-pandemic levels. A recent estimation by Standard & Poor’s anticipates the GGR will achieve 85% to 90% of previous levels, exceeding the initial projection of 75% to 85%. Such an outcome is particularly beneficial for Sands, a leading contender in mass and premium-mass betting in Macau, together with competitor, Galaxy Entertainment.

Although the September GGR might be marred by the suspension of operations due to the storm, the impending Golden Week holiday may serve to counter the narrative of China’s economic frailty.

“We foresee an appealing prospect for Macau-focused stocks as we approach the second half of 2023 and 2024,” Wieczynski declared, attributing the recent plunge in share values chiefly to China’s macroeconomic woes.

Wieczynski also expressed a preference for Wynn over its competitor, Sands China, praising the former’s emphasis on premium mass clients. These clients are more economic-sensitive than mass-market bettors which adds to its appeal.

Both companies are currently trading at substantial markdowns from their historical averages. This implies that investors can capitalize on these stocks without tolerating high multiples.

“LVS now stands at a 2.5 turn discount to their previous average, whereas WYNN aligns at a 3x discount compared to their earlier trading mean,” observed Wieczynski.