Editor's Note: Below is a complimentary excerpt from a recent institutional research note written on by our Gaming, Lodging, and Leisure (GLL) analyst Todd JordanIf you are an institutional investor interested in accessing our research email sales@hedgeye.com

Is Macau Poised For A Recovery?  - 3 1 2021 12 32 02 PM

The well connected CEO, Lawrence Ho, was unusually positive during MLCO’s Q4 earnings conference call on Thursday, and now optimism is abound in Macau.  We say “unusually” because Mr. Ho was (correctly) the voice of caution regarding the timing of the recovery most of last year. 

His optimism wasn’t fueled by the February performance as Macau GGR for the month dropped 71% vs February ’19 levels, which represents a slight deceleration in growth from January’s performance of -68%. 

Growth on a YoY basis was up substantially, though given casino closures and the initial Covid scare of last year, we find it easier to reconcile current trends vs ’19 levels.  Rather, Ho’s optimism surrounds the future, and possibly the near term and our sources echoed his upbeat tone this AM. 

Quarantine restrictions from certain provinces and cities were lifted last week, vaccine rollout progress is improving, and there is optimism that online visa registration (e-visas) could resume in the near future. 

With that optimism in mind, we’d expect the next week to two weeks to remain sluggish as is typical around the National Peoples Congress sessions, but following these sessions demand could pick back up around the middle of the month or sooner.

On the topic of vaccines, Macau took delivery of their Pfizer mRNA vaccines over the weekend which should help accelerate their local vaccination program.  Macau is now armed with close to 400K Pfizer vaccines (good for 200K adults), then another 400K Sinopharm vaccines, and then are expecting a shipment of Astra Zeneca’s vaccine as well. 

Relative to a few weeks ago, Macau is in a much better position to vaccinate and loosen its border a bit. We’re bullish on the Macau recovery and have LVS and WYNN featured as our top picks in the space.           

Is Macau Poised For A Recovery?  - qb