Analyst Note| Jennifer Song |
Today’s pullback in Macao gaming companies’ share prices of 3.2%-6.5% was largely driven by the news of rising COVID-19 cases in Hong Kong and the delay of an air travel bubble between Hong Kong and Singapore, which has dampened market sentiment. However, we expect limited impacts to the sector’s near-term outlook and long-term prospects, which are primarily driven by recovery of tourism traffic from mainland China, as well as China’s expanding prosperity. We maintain both our earnings forecasts and fair value estimates for the six Macao gaming companies. We continue to expect Macao's gaming sector to return to profitability in the fourth quarter of 2020, and a full recovery to pre-pandemic 2019 levels by early 2022, underpinned by our base case view for a COVID-19 vaccine to be available by mid-2021.