{"id":221848,"date":"2022-07-18T16:28:24","date_gmt":"2022-07-18T21:28:24","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=221848"},"modified":"2022-07-19T11:47:19","modified_gmt":"2022-07-19T16:47:19","slug":"macau-concessionaires-contending-plenty-of-risks-says-moodys","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/macau-concessionaires-contending-plenty-of-risks-says-moodys\/","title":{"rendered":"Macau Concessionaires Facing \u2018Significant Risks,\u2019 Says Moody\u2019s"},"content":{"rendered":"

On the heels of news that Macau is extending the temporary closure of casinos by another five days, it\u2019s safe to say concessionaires there face considerable operational risk.<\/p>\n

\"Macau
A view of Macau\u2019s landscape, featuring several casinos. Moody’s sees risks for concessionaires there. (Image: Barron’s<\/em>)<\/figcaption><\/figure>\n

The new restrictions equal the special administrative region\u2019s second round of casino closures since the onset of the coronavirus pandemic. As a result, analysts view the third quarter as a lost cause for operators and are forecasting slack revenue figures from mass market players.<\/p>\n

We estimate gross gaming revenue (GGR) for the mass segment — the key contributor to gaming operators\u2019 profit and cash flow — will weaken to 30% of 2019 levels this year, before improving to 70% in 2023. We expect a full recovery in the mass segment only in 2024, which will lead to a significant improvement in the gaming operators’ credit metrics,\u201d said Moody\u2019s Investors Service in a new report.<\/p><\/blockquote>\n

Further straining Macau operators<\/a> is the point that a recovery in VIP betting is unlikely due to closures of junkets that serviced the SAR. The six Macau concessionaires are Galaxy Entertainment, Las Vegas Sands (NYSE:LVS), Melco Resorts & Entertainment (NASDAQ:MLCO), MGM Resorts International (NYSE:MGM), SJM Holdings, and Wynn Resorts (NASDAQ:WYNN)<\/a>.<\/p>\n

For Macau Concessionaires, Geography Matters<\/h2>\n

With the Macau recovery timeline consistently lengthening, geography matters for operators. Said another way, the more diverse their property portfolios are, the better.<\/p>\n

SJM Holdings has a Macau-only presence, perhaps explaining why that operator is universally viewed as the most financially imperiled of the casino companies there.<\/p>\n

\n

Among US companies that don\u2019t produce semiconductors, LVS and Wynn are among the most dependent on China (Macau) for revenue. With the casino hub essentially a ghost town, for the time being, Sands is increasingly dependent on Marina Bay Sands in Singapore<\/a>, while Wynn needs to wring more upside out of its US venues in Boston and Las Vegas.<\/p>\n<\/div>\n

\u201cMGM is the most insulated from continued weakness in the Macao gaming market because of the strong recovery in its extensive US operations,\u201d adds Moody\u2019s. \u201cSJM is highly exposed, not only because of its exclusive footprint in Macao but also because high operating expenses are driving EBITDA negative, which can further increase debt and weaken both liquidity and capital structure.\u201d<\/p>\n

Slow Recovery Problematic<\/h2>\n

Nearly seven months into 2022, it\u2019s becoming clear that barring a miracle, Macau\u2019s recovery will be put off until 2023, and that\u2019s a best-case scenario.<\/p>\n

\u201cIt could occur mainly because of continued travel restrictions and business closures amid the resurgence of the pandemic. In this downside scenario, we assume mass GGR will return to only 60% of pre-pandemic levels in 2023 and 80% in 2024. As a result, credit metrics of Macao-focused operators will remain very weak till 2024, and their ratings will come under heightened pressure,\u201d concludes Moody\u2019s<\/p>\n

In a note to clients today, Morgan Stanley upgraded Wynn Macau to \u201coverweight\u201d from \u201cequal-weight\u201d while reiterating an \u201coverweight\u201d rating on Sands China. The bank rates MGM China \u201cequal-weight.\u201d <\/strong><\/p>\n

Those are the Macau arms of the trio above of US-based gaming companies.<\/p>\n","protected":false},"excerpt":{"rendered":"

On the heels of news that Macau is extending the temporary closure of casinos by another five days, it\u2019s safe to say concessionaires there face considerable operational risk. The new restrictions equal the special administrative region\u2019s second round of casino closures since the onset of the coronavirus pandemic. As a result, analysts view the third […]<\/p>\n","protected":false},"author":46,"featured_media":221849,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[69069,10],"tags":[],"acf":[],"yoast_head":"\nMacau Concessionaires Contending Plenty Of Risks, Says Moody's<\/title>\n<meta name=\"description\" content=\"Operational risks running high for Macau concessionaires.\" \/>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Macau Concessionaires Contending Plenty Of Risks, Says Moody's\" \/>\n<meta property=\"og:description\" content=\"Operational risks running high for Macau concessionaires.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/macau-concessionaires-contending-plenty-of-risks-says-moodys\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2022-07-18T21:28:24+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-07-19T16:47:19+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/07\/Macau.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1280\" \/>\n\t<meta property=\"og:image:height\" content=\"720\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/macau-concessionaires-contending-plenty-of-risks-says-moodys\/\",\"url\":\"https:\/\/www.casino.org\/news\/macau-concessionaires-contending-plenty-of-risks-says-moodys\/\",\"name\":\"Macau Concessionaires Contending Plenty Of Risks, Says Moody's\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-concessionaires-contending-plenty-of-risks-says-moodys\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-concessionaires-contending-plenty-of-risks-says-moodys\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/07\/Macau.jpg\",\"datePublished\":\"2022-07-18T21:28:24+00:00\",\"dateModified\":\"2022-07-19T16:47:19+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Operational risks running high for Macau concessionaires.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-concessionaires-contending-plenty-of-risks-says-moodys\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/macau-concessionaires-contending-plenty-of-risks-says-moodys\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/macau-concessionaires-contending-plenty-of-risks-says-moodys\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/07\/Macau.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/07\/Macau.jpg\",\"width\":1280,\"height\":720,\"caption\":\"A view of Macau\u2019s landscape, which mostly includes casinos. 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