MSC - Macau sector looks set to finally rebound - Bank of America

Bank of America stayed constructive on the Macau sector after the region saw its worst monthly gross gaming revenue tally since September of 2020 when GGR fell 62.1% year-over-year to 6.54B patacas in June. The sharp drop was due to local COVID cases in Macau and travel restrictions throughout China.

BofA thinks the month may have marked a low point for the sector.

Analyst Billy Ng: "We believe the business shall be able to rebound quickly once situation improves, based on the previous experience. Meanwhile, we believe the license rebidding process shall be out soon in 3Q and all six gaming operators can obtain the new gaming licenses."

Current sector valuation is called attractive at 11.7X 2023 EV/EBITDA estimates, which is well below the long-term average.

Over the weekend, the Macau government published casino license re-tender rules without any major surprises.

Macau casino stocks: Wynn Macau ( OTCPK:WYNMF ) ( OTCPK:WYNMY ), Wynn Resorts ( NASDAQ: WYNN ), Sands China ( OTCPK:SCHYY ) ( OTCPK:SCHYF ), Las Vegas Sands ( LVS ), MGM China ( OTCPK:MCHVF ) ( OTCPK:MCHVY ). MGM Resorts ( MGM ), Galaxy Entertainment ( OTCPK:GXYEF ), SJM Holdings ( OTCPK:SJMHF ) ( OTCPK:SJMHY ), Melco Resorts & Entertainment ( MLCO ), Studio City International ( MSC ).

Read about some of the easing of COVID restrictions in China.

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