Though it may not have the highest profit margin or ROE among the four, it is the only company that registered year-on-year revenue and net profit growth. Chinese government’s crackdown on luxury spending in 2015) or an economic downturn. Gambling is in everyone’s blood, and there is no better place to wager bets than massive complexes known as casinos. Casino stocks have been trending downwards since the coronavirus outbreak was declared an epidemic in China, which subsequently led to a two-week shutdown in Macau. Transport links with mainland China have been curtailed, flights and ferry services were canceled, and entry without proper medical documentation was denied. Investors are optimistic about a revival of the world’s largest gambling hub. Macau is the gambling capital of the world. FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. The People's Republic of China's obligation to run Macau as a special administrative region, per the Joint Declaration on the Question of Macau, expires on 20 December 2049.
A high net profit margin helps to buffer the company against sudden drops in demand, which may be caused by regulatory changes (e.g. All rights reserved. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. Wynn Resorts (WYNN +6.8%), Melco Resorts & Entertainment (MLCO +3.2%) and Las Vegas Sands (LVS +5.6%) are up for a second day in a row after new visa developments gave investors a reason to be hopeful that traffic could return to the gambling mecca. node.dataset.value : node.getAttribute('data-value'); if (selectedValue) { for (var j = 0; j < node.options.length; j++) { if(node.options[j].value === selectedValue) { node.options[j].selected = 'selected';break;}}}}}, Do Not Sell My Personal Information (CA Residents Only). But investors were eager to hear management’s comments on the situation and its outlook for 2020. SJM has the lowest net margin of all the casino companies at 9.8%. Las Vegas Sands was the first among peers to report fourth-quarter results and discuss the impact of the outbreak publicly.
Starting Wednesday, Chinese authorities will resume issuing tourist visas for visitors to Macau from across China. “The announced closure of the Macau casinos for two weeks is not all that surprising and prospectively included in estimates and stocks,” Jefferies analyst David Katz wrote in a Tuesday note. It has a very high Human Development Index and the fourth-highest life expectancy in the world. )+[a-z]{2,63}/i);}, failureMessage: "Value must not contain any URL's"});field11.add(Validate.Presence, {failureMessage:"This field is required"});field11.add(Validate.Length, {tooShortMessage:"Invalid length for field value", tooLongMessage: "Invalid length for field value", minimum: 4, maximum: 4});function handleFormSubmit(ele) { var submitButton = ele.querySelector('input[type=submit]'); var spinner = document.createElement('span'); spinner.setAttribute('class', 'loader'); submitButton.setAttribute('disabled', true); submitButton.style.cursor = 'wait'; submitButton.parentNode.appendChild(spinner); return true; }function resetSubmitButton(e){ var submitButtons = e.target.form.getElementsByClassName('submit-button'); for(var i=0;i In that vein, I decided to take a look into four Hong Kong-listed Macau casino stocks to determine which is the most attractive for investors. Still, if the closure bleeds further into March, casino stocks could become volatile again. The coronavirus outbreak has killed more than 420 people and infected more than 20,000 globally, mostly in mainland China but including Hong Kong, Macau, the U.S., and dozens of other countries. Macau Casinos Are Closed for Two Weeks. Results for the current quarter will certainly be affected by the 15-day closure. To curb the spread of China’s coronavirus, the Macau government has suspended all casino operations for 15 days. Macau remained under Portuguese control until 1999, when it was returned to China. Powered and implemented by Interactive Data Managed Solutions. Market data provided by Interactive Data. To curb the spread of China’s coronavirus, the Macau government has suspended all casino operations for 15 days. Now that the casinos are open and the “fear factor” is lower, are Macau casino stocks such as Wynn Macau , MGM China , Sands China Ltd (SEHK: 1928), and Galaxy Entertainment Group (SEHK: 27) buys now for investors? © 2020 The Motley Fool Hong Kong Limited. Though it may not have the highest profit margin or ROE among the four, it is the only company that registered year-on-year revenue and net profit growth. Uncertainty In Tuesday afternoon trading, Wynn Resorts (ticker: WYNN) jumped 3.4%, Las Vegas Sands (LVS) climbed 2.6% and MGM Resorts (MGM) rose 3.6%. Authorities in Macau neighbor Zhuhai city will resume the issuance of exit tourist visas tomorrow. All in all, Sands China offers the best bang for an investor’s buck among the Macau gaming stocks. As the rest of China bans gambling, with Macau the only place within its jurisdiction where it is legal, the former Portuguese colony has been a prime beneficiary of those looking to mix leisure with gambling. Its economy is heavily dependent on gambling and tourism, and in 2006 it surpassed Las Vegas as the world's largest gambling center by revenue. Its net margin is also impressive at around 24%, while ROE is superior at 60+%. The integrated resorts (IRs) of Macau, the world’s gambling mecca, have proven to be experts at drawing in gamblers. Along with Hong Kong, Guangzhou, Shenzhen, Zhuhai, and several other major cities in Guangdong, the territory forms a core part of the Pearl River Delta metropolitan region. )+[a-z]{2,})$/i, failureMessage: "A valid email address is required"});var dom2 = document.querySelector('#form1783 #field2');var field2 = new LiveValidation(dom2, {validMessage: "", onlyOnBlur: false, wait: 300});field2.add(Validate.Presence, {failureMessage:"This field is required"});var dom11 = document.querySelector('#form1783 #field11');var field11 = new LiveValidation(dom11, {validMessage: "", onlyOnBlur: false, wait: 300});field11.add(Validate.Custom, {against: function(value) {return !value.match(/(telnet|ftp|https?):\/\/(?:[a-z0-9][a-z0-9-]{0,61}[a-z0-9]\.|[a-z0-9]\. I would like to receive Nasdaq communications related to Products, Industry News and Events.You can always change your preferences or unsubscribe and your contact information is covered by our Privacy Policy. Katz thinks the coronavirus impact should be confined to the first quarter and casino operations should ramp up for the remainder of the year. That doesn’t necessarily make casino stocks a winning bet—at least not for a while. Total visits during the Lunar New Year were down 78%, driven by an 83% decline in visitors from China. Nonetheless, the shares of the big casino companies roared ahead in a broad advance for stocks. During the following two weeks, the casino operator will likely lose about $2.4 million a day because of the closure, Katz wrote. With increasing affluence in China and with the Chinese economy registering strong GDP growth over the last two decades, the growth of the middle-class and upper-middle-class segments has been strong. The Dow Jones Industrial Average was up 1.7%. Recommendations and opinions are subject to change without notice. This is evident from the industry and the S&P 500 Index’s decline of 10.6% and 5.2% over the same timeframe. The announcement came as the second coronavirus-related death outside of mainland China was confirmed in Hong Kong—40 miles away from Macau. From As a special administrative region, Macau maintains a separate political and economic system apart from mainland China. In 2015, Macau was ranked as the fastest growing metropolitan area in the world by the Brookings Institution. https://asset.barrons.com/dj-mg/dice/barrons-staffpicks-2d590600-c862-4394-b9d3-66b48c376d60/inset.json. Winner: Wynn Macau The best casino stock Overall, after weighing the various aspects above, I have to conclude that Sands China is the clear-cut winner. Offers may be subject to change without notice. For net profit margin, Galaxy and Sands China are clearly the leaders, with net margins above 20%. Investors will be hearing more from casino operators as they report earnings in the coming days. Casino Investors Say 'No Dice' to Gambling Stocks With Macau Exposure Investors are walking away from casino operators that have exposure to Macau … Overall, after weighing the various aspects above, I have to conclude that Sands China is the clear-cut winner. Terms & Conditions. Please remember that investments can go up and down, including the possibility a stock could lose all of its value. Find the best Casino Stocks to buy. Site (and App) Updates from the Last Few Months, A new trading strategy from a future star trader, This Is One Of The Greatest Secular Growth Trends, Free Group Coaching and Mentoring at Traders Summit. © 2020, Nasdaq, Inc. All Rights Reserved. Last week, the casino giant posted 88 cents in adjusted earnings per share on net revenue of $3.51 billion for the three months ended in December, up 14% and 1%, respectively, from a year earlier and beating Wall Street expectations on both figures. Macao's Casino Stocks Still Have a Lot to Lose As Coronavirus Spreads A two-week shutdown may just be the start for Macao's casino companies. .