Investors in stocks of Macau-based casino operators will not easily forget 2015. Prices of shares in the city’s five casino operators listed in the Hong Kong Stock Exchange dropped between 30 percent and almost 60 percent during the past year.
In the same period, the Hang Seng Index, Hong Kong’s main indicator for stock performance, declined by more than 7 percent.
With the final trading session of 2015 completed – when the Hong Kong Stock Exchange closed at 12 noon local time on Thursday – the full-year picture is glum for Macau casino names.
The worst performing casino stock in 2015 was Wynn Macau Ltd. The company’s stock ended the year with a price of HKD9.06 (US$1.13) apiece, representing a decline of 59 percent in annual terms.
While SJM Holdings Ltd ended the year with its stock price up 2.41 percent for the last trading day, the company had the second worst performance among Macau names in full 2015. Its stock price declined 55 percent during the year, ending at HKD5.53 – the lowest price for a Macau casino operator.
On the other end of the spectrum was Sands China Ltd, the firm with the least bad stock performance. Still, the price of the company’s shares recorded a decline of 30 percent in 2015. The Las Vegas Sands Corp subsidiary ended the year with its stocks valued at a HKD26.55 apiece.
The price of shares in Macau-based casino operators in 2015 was heavily impacted by the city’s ongoing slump in gaming revenue. Macau’s accumulated casino gross gaming revenue for the first 11 months of the year fell 35.3 percent compared to the same period in 2014, according to data released by the city’s gaming regulator on December 1.
Investment analysts have linked Macau’s sustained gambling decline to China’s anti-graft campaign, which began in the autumn of 2012, at the time Xi Jinping became Communist Party chief in China, but only started to show itself in the Macau gaming numbers in mid-2014.
A report earlier this month from Morgan Stanley group suggested China’s clean up campaign had moved from “anti-extravagance” to “anti-corruption” in the period from 2012 to 2015, and would enter the stage of “preventive measures” in 2016, with the possibility of some stabilisation in mass gaming. The mass market gambling segment has generally been declining in Macau at a slower rate than the VIP segment.
MGM China Holdings Ltd, which operates MGM Macau in the peninsula, recorded a decline of 51 percent in share price for 2015. Its stock closed on Thursday trading at HKD9.70 per unit. Galaxy Entertainment Group Ltd posted a decrease of 44 percent in share price for the year ending on Thursday. Its stock closed that day at HKD24.45 apiece.
Of the six Macau gaming operators, only Melco Crown Entertainment Ltd is not listed in the Hong Kong Stock Exchange – its stocks stopped being traded there on June 29. But the casino operator retained its primary listing on Nasdaq, in the United States. At the end of December 30, its share price was down by 34 percent compared with the last day of 2014. Prior to market opening on Thursday, Melco Crown’s stock was valued at US$16.85 apiece.
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"We forecast Grand Lisboa Palace will have EBITDA of HKD2.0 billion (US$260 million) with 330 tables by 2022, and HKD3.5 billion with 380 tables by 2023"
Credit rating agency Fitch Ratings