Bernstein projects Macau recovery in 20H2

Bernstein Research released a research note on Friday morning projecting that Macau gaming would see a recovery in the second half of this year.

“Macau’s recovery hinges primarily on the timing of the loosening of border restrictions between Macau/Hong Kong/China and the resumption of IVS visas (which have been suspended since late January). With continued zero new COVID-19 cases in Macau (and dropping numbers across southeast China and Hong Kong), we are optimistic that travel restrictions in/out of Macau will be lifted by early June and IVS restart will begin soon after (in a phased manner). We expect the sector as a whole to react positively as catalysts emerge – step-by- step easing travel restrictions, continued signs of China recovery, return of visitation into Macau,” the note stated.

Bernstein also offered a sketch of which firms it expected to witness a quicker recovery.

“Melco and Wynn Macau (and to a lesser extent, Galaxy) should outperform in the early stages of the Macau rebound driven by premium mass and VIP recovery. Melco and Wynn Macau both focus on the higher end premium gaming customer and their product positioning offers would give them a competitive advantage over the first few months of a high-end recovery. While base mass will surely come back to Macau, and benefit Wynn Macau further, this will take a longer time,” the note asserted.

On the hand, the note added, “We continue to view MGM China and SJM more negatively. Execution challenges are of concern as is management. MGM China’s CEO recently retired earlier than expected, without a new leadership announcement. MGM’s Cotai property has ramped up weaker than expected and we do not expect a major turnaround. At SJM, the continued delay of opening on Cotai and the execution risk, leave us concerned about ramp up. We see better opportunities for Macau investment via the other four operators.”