Macau casino shares rise as analysts cheer re-licensing report

[LOS ANGELES] Wynn Resorts, Las Vegas Sands and MGM Resorts International rose in New York trading after authorities in Macau released favourable results from public hearings on the renewal of casino licences in the world's largest gambling market.

The public comment period, which ran from Sep 15 to Oct 29, produced opinions largely as expected, with the respondents mostly OK with the current arrangements, according to a Thursday (Dec 23) summary of the findings by Sanford C Bernstein & Co.

Most participants said the current number of 6 casino licensees was a good number while the length of their concessions should be less than 20 years, Bernstein analyst Vitaly Umansky wrote.

The report boosts the likelihood that the current operators will get their concessions renewed by the June 2022 expiration of the current licences without a major rewriting of the terms.

"We still believe the government is wholly set on finalising the new concessions prior the June expirations," Umansky said. "We do not view anything in the report that raises issues."

Commentators agreed that capital commitments in the region should be increased, as well as local ownership and management. They also supported a government representative in the casinos, one of the proposals Macau authorities have said they were considering.

The majority of respondents disagreed, however, that the government should have control over dividends paid by the casino operators to shareholders.

NOT FINAL

The report is just a summary of public opinions and doesn't represent a final decision by local authorities, Umansky wrote.

Sands rose as much as 6.4 per cent to US$39,38. Wynn was up as much as 5.4 per cent, while MGM was up 3 per cent. Shares of the 3 Chinese operators, Melco Resorts & Entertainment, Galaxy Entertainment Group and SJM Holdings also climbed.

Macau opened its casino market to foreign investment 2 decades ago, and the region has since exploded in popularity. The business has been impacted recently by restrictions on travel due to the global pandemic.

Still, the market is viewed as lucrative one long term. "We continue to believe that the market would likely accept a reasonable reduction of concession term (to 10 years, similar to that of Singapore)," Citigroup analyst George Choi wrote in a note Thursday.

BLOOMBERG