Coronavirus Fears Ease in China: Will Macau Gaming Rebound?
Although the rest of the world is bearing the brunt of coronavirus, China — the place of origin of the outbreak — is gradually getting back to normal. The outbreak has wreaked havoc impacting industries like Transportation, Leisure, Restaurants, Auto, Pharma, Electronics, Technology, Cosmetics and Apparel.
Casinos stocks have also been impacted by the deadly virus. In February, gaming revenues from Macau decreased 87.8% to 3.1 billion patacas ($387 million) due to coronavirus scare. Notably, the casino operators in Macau were already grappling with a slowdown in China and the trade war between Beijing and Washington. The outbreak further added to their woes.
However, Macau casinos, have resumed operations after coronavirus-led shutdown. Nearly 37 casinos and 5,400 casino gaming tables, which represent 80% of total market capacity, are in operation. Macau gross revenues in March are likely to be down sharply, after a similar decline in February. However, in March, we expect sequential improvement.
Macau Gaming Revenues 2020 Forecast Cut
The world’s biggest gambling hub is likely to record revenue decline in the rest of the year as well. The government has reduced 2020 Macau gross gaming forecast by half. It now expects gross gaming revenues to be 130 billion patacas ($16 billion), compared with the prior estimate of 260 billion patacas.
The lower estimate can be primarily attributed to a decline in footfall as China continued to stop individual as well as group visas to Macau in a prolonged fight against coronavirus. Macau has put restrictions on all non-residents who have recently traveled abroad. The government has also enforced body temperature check at casinos entrance.
Macau economy in 2020 is likely to suffer as gaming revenues account for 80% of tax revenues collected by the Macau government.
The local government is trying to boost spending by giving vouchers worth $375 to citizens, which can be spent on anything in Macau.
Coronavirus Sharply Reduces Casinos Stocks’ Market Cap
The global stock markets have been rattled by the coronavirus crisis and the casinos stocks are no exception.
Wynn Resorts, Limited WYNN has been impacted by the coronavirus crisis. In fact, shares of the company have tanked 54.4% in the past three months. In the past 60 days, estimates for the current year have been revised downward by 76.3% to $1.32. The company currently has a Zacks Rank #5 (Strong Sell).
Shares of MGM Resorts International MGM have declined 63.3% in the past three months. The company’s performance in 2020 will be impacted by the coronavirus outbreak. The Zacks Rank #4 (Sell) company’s earnings estimates for current quarter and year have declined 25 cents and 65 cents, respectively, in the past 60 days.
Shares of Melco Resorts & Entertainment Limited MLCO have declined 49.2% in the past three months. The company, which develops, owns, and operates casino gaming and entertainment casino resort facilities in Asia through its subsidiaries, has been impacted by the deadly virus as well. The Zacks Rank #3 (Hold) company’s earnings estimates for current quarter and year have declined 65 cents and $1.28, respectively, in the past 60 days.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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