Wynn Macau Ltd.’s
1128,
shares rose sharply Thursday amid improved investor sentiment after China eased COVID-19 restrictions further.
The casino operator’s shares rose as much as 18% to 9.15 Hong Kong dollars (US$1.17) early Thursday, and are on pace for their biggest one-day gain this year. They were last up 16% at HK$9.04, and up 42% year to date.
The shares have more than doubled from its Nov. 25 closing price following the company’s successful renewal of its 10-year license to operate in the world’s largest casino hub.
Macau’s casino stocks advanced further this week in response to news of China gradually easing its quarantine restrictions, as the sector relies heavily on tourists from mainland China.
On Wednesday, China’s National Health Commission said Covid patients with mild or no symptoms will be allowed to quarantine at home, among various other measures.
Earlier in the week, Macau’s government secretary for health matters, Elsie Ao Ieong U, also hinted that local authorities are studying ways to further ease restrictions, which have weighed on casino earnings during the pandemic. She didn’t provide details on how the city intends to gradually ease these restrictions, according to local media reports.
Among peers, Wynn Macau “has a clear edge in terms of premium product offerings which could become more visible when industry volumes come back in 2023,” Morgan Stanley analysts Praveen K Choudhary and Gareth Leung said in a note.
Further, Morgan Stanley said the burden of Wynn Macau’s required nongaming investment is much lower than peers MGM China Holdings Ltd.
2282,
and SJM Holdings Ltd.
880,
Morgan Stanley also said it thinks Macau is two steps away from travel returning to normal, estimating that borders between the city and mainland China could fully reopen in the second half of 2023.
“Reopening and easier travel are key themes of 2023,” the Morgan Stanley analysts added. They have an overweight rating and target price of HK$8.00 on Wynn Macau’s shares.
Meanwhile, DS Kim, JPMorgan’s head of Asia gaming, said he expects Macau casino stocks to “finish 2022 strong and start 2023 even stronger.”
Kim has Wynn Macau as one of his “high-beta, high-risk, high-return picks,” as he thinks the casino operator’s potential upside is stronger than its peers.
Wynn Macau’s shares could become more attractive next year when there hopefully will be a clearer picture on how the sector will recover, Kim added.
He has an overweight rating and target price of HK$6.80 on Wynn Macau, and pegged the stock as the second-best pick in the sector.