The share prices for Nevada-based Macau casino operators took another hit Wednesday as news surfaced that a Chinese visitor was hospitalized after she became the first confirmed case of a viral outbreak in the gaming enclave.
Analysts said Macau gaming stocks have declined roughly 10% this week on fears of the coronavirus spreading. Investors have expressed concern that the illness will disrupt the Chinese New Year holiday starting this week.
“There are also fears the virus will spread exponentially this upcoming holiday season,” said Macquarie Securities gaming analyst Edward Engel, who is based in Hong Kong. “In the coming weeks, over 1 billion travel movements are expected in Greater China, creating risk of a more lasting impact on China travel.”
The concern sent the share prices of the three major Nevada casino operators in Macau on a downward trend for the second straight day, although the losses weren’t as steep as Tuesday’s slip.
Las Vegas Sands was down 61 cents, or 0.87%, to close at $69.45, while MGM Resorts International was down 44 cents, or 1.36%, to close at $31.95. Both companies are traded on the New York Stock Exchange
Wynn Resorts, which is traded on the Nasdaq, closed down $2.22 or 1.56% to end the day at $140.09.
Jefferies gaming analyst David Kayz said the “scale and scope” of how Macau will be impacted “are unknowable” with one case indicated in Macau.
“We calibrate temporary estimate impacts coupled with multiple compression for Macau-related stocks,” Katz told investors. “Logic suggests the negative news flow and stock impacts are a temporary resetting of risk tolerance that finds an inflection point absent of a broad impact on travel.”
Engel said early indications show Macau hotel bookings were strong over Chinese New Year, with no material cancelations.
“But we acknowledge the situation remains fluid,” Engel said in a research note. “We believe Macau investors are more concerned about the coronavirus spreading exponentially rather than merely impacting revenues over Chinese New Year.”
The Macau government said the first case of coronavirus in the region was a 52-year-old Chinese woman from Wuhan, who arrived in Macau via the Gongbei border gate on Sunday. She is reported to have spent the majority of her time at New Orient Landmark Hotel before falling ill and seeking medical attention 48 hours later.
Travel warnings were issued this week after reports of nine people having died and more than 450 diagnosed with the virus that originated in the city of Wuhan. The illness is being compared to the SARS outbreak that killed almost 1,000 people in the early 2000s.
Engel said visitation to Macau declined for more than a month after the initial outbreak reports of SARS in 2003 and the H1N1 Swine Flu in 2009.
However, he said Macau visitation made a full recovery almost immediately after both epidemics were contained.
“As such, while we acknowledge short-term volatility concerns, we believe headwinds will subside in a couple of months, even if impacts from the coronavirus are as devastating as SARS,” Engel said.
#newsroom – Fears of coronavirus spread again rip into Macau gaming stocks. –@howardstutz, CDC Gaming Reports. https://t.co/W4xZVazjun #CDCgaming
— CDC Gaming Reports (@CDCNewswire) January 23, 2020
The Chinese New Year holiday is expected to be a period of tremendous visitation to Macau. January is viewed as a potential boost to Macau’s casino industry, which is looking to rebound after seeing gaming revenue decline 3.4% in 2019, the special administrative region’s first annual revenue drop since 2016.
Visitors from the Hubei province, where Wuhan is located, account for roughly 2% of Macau visitation, Engel said.
“Local authorities have already suspended travel tours from the city of Wuhan,” Engel said. “Other than Wuhan, regulators are not planning to restrict traffic flows ahead of the Chinese New Year holiday.”
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
