Provisional Macao License Renewals Remove Overhang on Shares, but Near-Term COVID-19 Risks Remain

This weekend’s news of provisional 10-year gaming license renewals for the six existing Macao operators removes an overhang on gaming operators’ shares. However, the news was expected, and the larger near-term unknown remains the demand impact from China's COVID-19 zero-tolerance policy. We maintain our $49, $107, and $48 fair value estimates on Las Vegas Sands (narrow moat), Wynn (narrow moat), and MGM (no moat), respectively. We rate Sands as near fair value but Wynn and MGM as undervalued. We think shares of all three might remain volatile until China moves further beyond its restrictive pandemic policy, which could occur in early 2023 when new government leadership positions take office.