The Macau casino sector is reeling again on Monday after China showed that the longstanding zero-tolerance COVID policy is still very much in effect.
Earlier on Monday, officials in the economic center of Guangzhou announced that all schools and restaurants will be closed in order to control the sudden rise in positive cases. That decision came just a few days after President Xi Jinping's re-election at the communist party meeting. There had been some hope that Beijing would eases up restrictions following the meeting.
Shares of Melco Resorts & Entertainment ( NASDAQ: MLCO ) fell 9.39% in premarket action on Monday and Wynn Resorts ( WYNN ) was down 6.36% .
Las Vegas Sands ( LVS ) shed 8.65% in the early session despite CFRA Research hiking its rating on the casino stock to Buy from Hold.
Analyst Zachary Warring Marina Bay Sands in Singapore continues to be the bright spot for the casino operator with $343M in adjusted EBITDA last quarter.
"Although LVS's balance sheet has weakened over the past two years due to Covid-19 lockdowns, the company has plenty of cash after the sale of The Venetian and we now expect continued improvement in Macao over the next 12 months bringing EBITDA up to about 60% of pre-pandemic levels. LVS has done well to cut expenses in a tough operating environment in Macao and we believe the risk is now skewed to the upside for shares."
The firm increased its 12-month price target to $43, which works out to 13.9X the 2023 EBITDA estimate and in line with the company's 10-year average forward EV/EBITDA multiple.
See all the valuation metrics on Las Vegas Sands.
For further details see:
Macau casino stocks slammed again after Guangzhou brings back COVID restrictions