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Casinos in the gambling hub of Macau will be allowed to reopen Saturday after a nearly two-week shutdown amid a Covid-19 outbreak, according to the government.
The citywide lockdown that began July 11 was the first shutdown of casinos in Macau since the early days of the pandemic in 2020. The government said most nonessential industries, companies and venues would be allowed to reopen starting Saturday through July 30.
Casino operators in Macau have been dealing with a longer-than-expected recovery there.
Las Vegas Sands Corp.
, which operates several casinos in Macau, on Wednesday after the stock market closed reported a net loss of $414 million in the three-month period ended June 30, compared with a net loss of $280 million in the same period last year. The company’s net revenue in Macau was $374 million for the quarter, down nearly 60% from $855 million last year.
Sands was the first of the three U.S.-based operators in Macau to update investors since the closures this month. Industry executives have continued to express confidence in a Macau comeback, but analysts have lowered gambling-revenue forecasts for the Chinese territory this year, and some predict a full recovery won’t come until 2024.
“We continue to believe Macau is an outstanding market for additional investment,” said Sands’ Chief Executive
Rob Goldstein
on a call with Wall Street analysts.
S&P Global Ratings earlier this month placed Sands and its Macau rival,
Wynn Resorts Ltd.
, on a negative credit watch, based on a reduced revenue outlook and uncertainty around China’s zero-tolerance Covid-19 policy. The ratings company maintained
which also operates in Macau, on negative watch. Gambling revenue for all of Macau in June fell to about $310 million, the lowest since September 2020.
The companies declined to comment.
In response to a Covid-19 outbreak, Macau casinos and other businesses were ordered to close July 11 for seven days as part of a citywide lockdown. The shutdowns were extended another five days, through Friday.
Residents lined up for Covid-19 testing in Macau in June.
Photo:
John Mak/REUTERS
Shares in Sands closed up 4.4% on Wednesday. Wynn shares rose 3.9%, and MGM Resorts shares were up 2.7%.
Gambling revenues worldwide plummeted in 2020 amid Covid-19 shutdowns. While Las Vegas has rebounded with historic high gambling revenues, Macau’s recovery has been slower under strict Covid-19 protocols and travel restrictions to the coastal territory.
Meanwhile, the casino operators’ government licenses expire at the end of the year, and companies are waiting for a public bidding process for new 10-year licenses. Moody’s Investors Service said it expects the Macau government to renew the six casino licenses, known as concessions, by the end of the year because of the government’s dependence on casino tax revenue and employment.
The market is key for Sands. In 2019, Macau operations generated $8.8 billion in net revenue for the company, while its Singapore casino-resort registered $3 billion in net revenue. The company sold its Las Vegas casinos in a deal that closed earlier this year for about $6.25 billion. Gambling revenue overall in Macau totaled $36 billion in 2019.
Mr. Goldstein said the sale of Sands’s Las Vegas properties has given the company ample liquidity, and the company’s Singapore casino is making money and has more opportunity ahead.
Analysts have painted a dimmer future for Macau this year. S&P recently reduced its revenue forecast to between 20% and 30% of prepandemic levels, down from the previous forecast of 30% to 40%.
Moody’s said it expects Macau gambling revenue from mass-market gamblers—a segment separate from VIP high-roller customers—to weaken to about 30% of prepandemic levels this year, rising to 70% in 2023 and a full recovery in the mass segment in 2024.
In a note published Monday, Bernstein Research said travel between Macau, China and Hong Kong should reopen in stages through the end of the year, with strong visitation and higher revenues in 2023.
“While the reopening may be delayed as China pursues its Dynamic Zero Covid policy, our long-term thesis on Macau remains firmly in place,” Bernstein analysts said. “China wants an economically viable and politically healthy Macau, and the gaming industry plays a critical role in allowing that to continue.”
S&P noted that Macau operators including MGM China, Wynn Macau and Sands China have an average of between 18 months and 20 months of liquidity, and about 90% of the companies’ Macau-related debt isn’t due until 2025 or later.
Wynn and MGM are expected to report quarterly earnings in the coming weeks.
Write to Katherine Sayre at katherine.sayre@wsj.com
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