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Jefferies, BofA bearish on CNY receipts, restrictions

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Chinese New Year in Macau is likely to be hampered by COVID restrictions again, Jefferies analysts notes.

COVID remains a major obstacle in Macau with new cases on the Mainland and the crucial Guangdong region once again threatening to push out the recovery timeline.

Jefferies expects the delay of the long-awaited China-Hong Kong border reopening and any further travel restrictions to set a disappointing context for the Chinese New Year, which starts on February 1, Seeking Alpha reports 

Jefferies analyst David Katz wrote that “given the lack of visibility into the near-to-medium-term recovery, we continue to prefer U.S. stocks.”

In turn, Las Vegas Sands slipped after BofA warned on continual zero-tolerance policy on COVID in China.

Bank of America dropped LVS lower, to an Underperform rating, after having the casino stock slotted at Neutral.

“We see continued risk from COVID-related disruption and do not see a simple or easy exit from the implications for Macau of China’s zero tolerance COVID policy. In addition, we think key source markets around Southeast Asia could weigh on the pace of recovery in Singapore,” BofA analyst Shaun Kelley wrote on a note quoted by SA. 

The ongoing concession process for Macau gaming licenses and geopolitical uncertainty could result in higher license fees or investment, BofA expects, as well as lower returns on capital and less dividend or valuation support relative to pre-COVID.

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