Macao gaming stocks pop

Key Concepts:

• Macau gambling revenue resurgence
• Post-pandemic recovery
• Gross gaming revenue (GGR)
• Casino stock performance (Wynn, Las Vegas Sands, Melco, MGM Resorts)
• Chinese macro backdrop
• Diversification of Macau's economy
• Promotional spending impact
• Pre-pandemic levels

Macau's Gambling Revenue Resurgence

• Macau is experiencing a post-pandemic resurgence in gambling revenue.
• June gross gaming revenue (GGR) showed a 19% improvement compared to the previous year.
• Total gambling revenue for June reached $2.6 billion.
• This positive trend follows back-to-back months of better-than-expected gambling results.

Casino Stock Performance

• Casino stocks with exposure to Macau are showing significant gains.
• Wynn is up approximately 8%.
• Las Vegas Sands is up approximately 8%.
• Melco is up approximately 11%.
• MGM Resorts, with the least exposure to Macau revenue, is up approximately 6%.
• Over the last three months, Melco has seen a 52% increase.

Analysis of Gaming Revenue Jump

• Stifel analysts suggest that the gaming revenue jump may be a result of promotional spending.
• Investors will be more interested if companies report that customers are spending more or differently.

Chinese Macro Backdrop

• The Chinese macro backdrop remains a key consideration for Macau casinos.
• Macau has not yet returned to its pre-pandemic levels.
• The upcoming earnings reports will provide more insight into the situation.

Divergence from Chinese Economy

• There can be a divergence between the strength of the Chinese economy and gambling activity in Macau.
• Macau's gambling is fueled by serious, hardcore gamblers.
• Efforts are being made to diversify Macau's economy beyond gambling.

Diversification Efforts

• Macau is working to diversify its economy by attracting visitors for reasons other than gambling.
• Examples include shows and NBA exhibition games.
• The key question is whether these visitors will spend money, similar to "Taylor Swift style spending," but without gambling.

Conclusion

Macau's gambling revenue is showing signs of a strong post-pandemic recovery, reflected in the stock performance of major casino operators. While promotional spending may be contributing to the growth, the long-term sustainability depends on broader economic factors and diversification efforts to attract a wider range of visitors. The upcoming earnings reports will provide crucial insights into the spending habits of visitors and the overall health of Macau's economy.