Macau Stocks Pop On June Revenue Numbers, Easing Of Visitation Rules

Shares of Macau casino operators are spiking this week following last Friday’s release of Macau’s gross gaming revenue (GGR) numbers for the month of June.

After early indications that GGR numbers for June might fall short of expectations, the 36.2 percent year-over-year GGR decline reported was slightly better than consensus estimates of a 37.0 percent decline and much better than the 40.0 percent decline that some had feared.

Finding A Bottom

June marks the 13th consecutive month of negative gaming revenue growth in Macau, but shareholders of Macau names are hoping that they have reached a turning point.

February marked the high point for gaming revenue declines so far in 2015 at -48.6 percent. After two consecutive monthly revenue declines came in at nearly exactly -39 percent, May’s -37 percent and June’s -36 percent could be further indicators that the Macau market is finally stabilizing.

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Despite indications that year-over-year GGR declines in Macau may have peaked, June’s GGR of only 17.3 billion patacas represents the lowest total monthly GGR number in Macau since November 2010.

Much-Needed Good News

Macau has seen a seemingly constant stream of bad news over the past year. Last year, the Chinese government announced a crackdown on corruption in Macau.

Increased government scrutiny coupled with a weakening Chinese economy led to a major falloff in VIP gamblers.

In addition, recent talks of expanding the partial smoking ban instituted in Macau casinos in October have increased pressure on stocks.

However, Macau finally got some good news this week, as the Chinese government eased Macau visitation rules for mainland residents. Mainland residents will now be allowed to visit Macau twice a month and stay up to seven days at a time. The previous restrictions allowed for only two visits per 60 days for a maximum of five days per visit.

Stocks React

The market had a strong reaction to the new Macau visitation rules and the latest GGR numbers.

Shares of U.S.-listed Macau casino operators Las Vegas Sands Corp. LVS, MGM Resorts International MGM, Wynn Resorts Limited WYNN and Melco Crown Entertainment Ltd MPEL have traded up between 5.5 percent and 14.2 percent so far this week.

Disclosure: the author owns shares of Melco Crown Entertainment.