China’s efforts to protect its citizens from a deadly virus outbreak through travel bans and other containment efforts decimated the first weekend of the Chinese New Year celebration in the world’s largest gaming market.
Visitation to Macau was down 60 percent for the first three days of the national holiday, which was a primary reason the stock prices of Nevada-based Macau casino operators on Monday took their steepest one-day declines since the outbreak of the novel coronavirus was first noted.
Analysts said they highly doubt Macau’s gaming market will show any signs of recover during January, a month that had been viewed as a rebound after gaming revenue declined 3.4% in 2019, the special administrative region’s first annual revenue drop since 2016.
Nomura Instinet analyst Harry Curtis told investors he expects to see double-digit declines in gaming revenue during January. But he also said it would take several days before the extent of the traffic damage is known.
China extended the New Year’s holiday to Feb. 2, but Curtis said the move was “more symbolic that effective.”
Meanwhile, shares of Las Vegas Sands Corp., which has the largest footprint in Macau of any Nevada casino company, saw its stock price tumble by $4.51 or 6.65% on the New York Stock Exchange to close at $63.34.
Wynn Resorts fell $10.86 or 8.06% on the Nasdaq to close at $123.89.
Sands and Wynn each draw more than 60 percent of their quarterly revenues from Macau.
MGM Resorts International, which is more focused on it properties throughout the U.S., saw its stock price dip $1.22 or 3.86% to close at $30.35 on the New York Stock Exchange.
Spokesmen for Sands and MGM said last week they were complying with requests from the Macau government and curtailing their Chinese New Year activities.
Wynn Resorts said it had scaled back Lunar New Year events in Macau, begun screening the temperature of all guests and taken other steps to comply with the directives of the Macau government. MGM and Las Vegas Sands also said they were following government guidelines. The companies declined to provide any cancellation figures in Macau.
“While stocks presumably remain choppy in the near term, we think the medium- to longer-term outlook is likely marked by higher highs, as we believe both pent-up demand within the Macau market, as well as the creation of favorable entry points, against a broadly improving core fundamental backdrop, should combine to drive incremental investment in the group,” Deutsche Bank gaming analyst Carlo Santarelli.
The analyst said he wasn’t marginalizing the possible ramifications of coronavirus.
“We are merely attempting to put some parameters around what this means to the respective operators, under several scenarios, over time,” Santarelli said.
The Chinese New Year holiday was expected to be a period of tremendous visitation to Macau.
On Monday, the Macau government confirmed three additional cases of the novel coronavirus bringing the total to five in the special administrative region.
Curtis said Macau casino operators are attempting to “back-fill” canceled reservations.
“Even if they were (successful), the quality of customer replacing premium players is likely to be much lower,” Curtis said.
Meanwhile, SunTrust Bank gaming analyst Barry Jonas told investors regional gaming markets are seeing “limited potential impact” since the U.S. exposure to the virus has been low.
#exclusive – Stock prices for Sands, Wynn, MGM decline as Macau’s New Year totals diminish. –@howardstutz, CDC Gaming. https://t.co/Tud5iOngzd #CDCgaming
— CDC Gaming (@CDCNewswire) January 28, 2020
“An exception could be Las Vegas, where both MGM and Caesars Entertainment have some exposure to high end Asian baccarat play,” Jonas said. “Still expectations around Asian VIP visitation to Las Vegas have been more limited this year.”
He said several Las Vegas tailwinds, such as a busy convention calendar, April’s NFL draft, and the opening season of the Las Vegas Raiders, “should more than offset any Asian weakness.”
(Associated Press contributed)
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
