Brokerage company Sanford C. Bernstein upgraded its ratings of two Macau casino firms. Analysts from Bernstein re-evaluated Sands China and Galaxy Entertainment Group. Also, they considered the capacity expansion for both casinos in 2020.
Bernstein analysts expected Macau’s gross gambling revenue to drop from 14 percent in 2018 to 3 percent in 2019. However, they still see a positive future for the Macau casino firms. In fact, they have a good long-term view for Galaxy after factoring in Phases 3 and 4 of the property’s developments.
Improved Ratings for Macau Casino Firms
Galaxy told industry news reporters that it wants to attract mass market visitors in its StarWorld and Galaxy Macau properties. In addition, the company will continue to cater to high rollers.
However, Macau casino firms still don’t have their own sportsbooks pay per head solution. Macau Slot has the monopoly until 2021. Sports punters in Macau need to go online to access the best pay per head bookie service.
While there is a risk of a slowdown in the VIP market in the next six to 12 months, diversifying the target market can help their bottom line. The analysts also said that Galaxy will benefit from the completion of its Phases 3 and 4 in the long run.
As for Sands China, focusing on the mass market will help improve its revenues. Also, the casino company has a strong balance sheet that will make its operations sustainable for years. The casino firm also upgraded the Parisian and Sands Cotai Central to help bring in more premium mass customers.
Once it completed its hotel suite capacity expansion, Sands China will attract more high rollers and tourists. Although its stocks are now trading below its historical average, analysts expect them to rebound soon.
Several factors caused the casino market slowdown in Macau. First, the casino smoking ban took effect on January 1 and kept some heavy smokers away from casinos. Second, the tension between China and the US kept some tourists away from the Asian gambling hub.
Although there’s a slowdown, Bernstein analysts are still confident about the two Macau casino firms. They expect the casino industry to remain positive in Macau over the next couple of months.