Forensic Analyst

Jason Yap, CFA

Forensic Accounting

<p>Macau's top gaming stocks <a href="https://www.straitstimes.com/business/companies-markets/macau-casinos-see-188-billion-wipeout-as-china-tightens-control" target="_blank" rel="noopener">lost</a> a record USD18 billion in combined market value on 15 September 2021 after the Macau administration <a href="https://www.ggrasia.com/public-consultation-re-gaming-law-review-from-sept-15/" target="_blank" rel="noopener">announced</a><a href="https://www.ggrasia.com/macau-may-end-casino-sub-concessions-directly-monitor-ops/" target="_blank" rel="noopener"></a> a 45 day public consultation period to discuss revisions to Gaming Laws, which comes as the June 2022 expiration deadline for existing gaming concessions loomed. </p><p>Amongst others, the abolishment of the sub-concession framework (which could reduce current 6 operators to 3 operators), restriction on distribution of dividend, and Macau government's direct supervision of casino operations drew the most consternation from investors and analysts. </p><p>The sweeping revisions compound the woes of Macau's casino operators, such as <a href="https://www.smartkarma.com/entities/wynn-macau-ltd" target="_blank" data-smartkarma-citation="entities:473:1" rel="noopener">Wynn Macau Ltd (1128 HK) </a> and <a href="https://www.smartkarma.com/entities/sands-china-ltd-088dbd12-a0e9-4516-a68f-6a3cf8aa065d" target="_blank" data-smartkarma-citation="entities:28515:1" rel="noopener">Sands China Ltd (SCHYY US)</a>, which had already been badly affected by pandemic driven travel restrictions, and which obliterated their gaming revenues.</p><p>While there were some improvements due to easing of travel restrictions for Mainland travelers in September 2020, gross gaming revenues (GGR) remain a shadow of its past.  The daily average of visitors to Macau during October's Golden Week was <a href="https://www.ggrasia.com/macau-oct-golden-week-daily-average-visits-dip-93pct-y-o-y/" target="_blank" rel="noopener">down 93.7%</a> on daily average in 2020. The decline coincided with new COVID-19 cases confirmed in Macau around the same period. </p><p>Amongst its peers, <a href="https://www.smartkarma.com/entities/wynn-macau-ltd" target="_blank" data-smartkarma-citation="entities:473:1" rel="noopener">Wynn Macau Ltd (1128 HK)</a>  is the most highly levered and had already dodged a bullet by securing covenant waivers in April 2020 at the peak of the pandemic.</p><p>In this Insight, we discuss the impact of the proposed revisions and subdued GGR recovery on <a href="https://www.smartkarma.com/entities/wynn-macau-ltd" target="_blank" data-smartkarma-citation="entities:473:1" rel="noopener">Wynn Macau Ltd (1128 HK)</a>'s cash reserves, debt servicing ability, and whether there may be potential breaches of its financial covenants.</p>

Macau's top gaming stocks lost a record USD18 billion in combined market value on 15 September 2021 after the Macau administration announced a 45 day public consultation period to discuss revisions to Gaming Laws, which comes as the June 2022 expiration deadline for existing gaming concessions loomed. Amongst others, the abolishment of the sub-concession framework (which could reduce current 6 operators to 3 operators), restriction on distribution of dividend, and Macau government's direct supervision of casino operations drew the most consternation from investors and analysts. The sweeping revisions compound the woes of Macau's casino operators, such as Wynn Macau Ltd (1128 HK)  and Sands China Ltd (SCHYY US), which had already been badly affected by pandemic driven travel restrictions, and which obliterated their gaming revenues.While there were some improvements due to easing of travel restrictions for Mainland travelers in September 2020, gross gaming revenues (GGR) remain a shadow of its past.  The daily average of visitors to Macau during October's Golden Week was down 93.7% on daily average in 2020. The decline coincided with new COVID-19 cases confirmed in Macau around the same period. Amongst its peers, Wynn Macau Ltd (1128 HK)  is the most highly levered and had already dodged a bullet by securing covenant waivers in April 2020 at the peak of the pandemic.In this Insight, we discuss the impact of the proposed revisions and subdued GGR recovery on Wynn Macau Ltd (1128 HK)'s cash reserves, debt servicing ability, and whether there may be potential breaches of its financial covenants.

Wynn Macau (1128 HK) - Gaming Law Revisions and Impact on Financial Covenants

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Bottom-Up

Galaxy Entertainment Group / Equity Bottom-Up

<p>For our next Webinar, we are thrilled to welcome Insight Provider <a href="https://www.smartkarma.com/profiles/howard-j-klein" target="_blank" data-smartkarma-citation="accounts:1005" rel="noopener">Howard J Klein</a>. Howard will go over his outlook on the casino and gaming sector in Asia for 2022 and present opportunities for investors in this space.</p>
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<h3>The webinar will be hosted on Wednesday, 6 October 2021, 11:00 SGT/HKT.</h3>
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<h2><a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=86290932330" target="_blank" rel="noopener">Register for the Webinar here</a></h2>
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<p>Howard J Klein has 25+ years of experience as a C-level executive of the casino industry in operations, marketing, international development, and strategic planning. He is currently a consultant specialising in the casino space, an industry expert contributor, and publisher of a subscription letter called "The House Edge". He gained extensive experience in marketing and development in the Asian gaming market while a senior executive at Caesars, Ballys Grand, and Trump Taj Mahal, and he was part of senior executive teams that valued acquisitions and mergers with companies in the casino, hotel, entertainment, and restaurant space.</p>
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For our next Webinar, we are thrilled to welcome Insight Provider Howard J Klein. Howard will go over his outlook on the casino and gaming sector in Asia for 2022 and present opportunities for investors in this space.

The webinar will be hosted on Wednesday, 6 October 2021, 11:00 SGT/HKT.




Register for the Webinar here

Howard J Klein has 25+ years of experience as a C-level executive of the casino industry in operations, marketing, international development, and strategic planning. He is currently a consultant specialising in the casino space, an industry expert contributor, and publisher of a subscription letter called "The House Edge". He gained extensive experience in marketing and development in the Asian gaming market while a senior executive at Caesars, Ballys Grand, and Trump Taj Mahal, and he was part of senior executive teams that valued acquisitions and mergers with companies in the casino, hotel, entertainment, and restaurant space.



Smartkarma Webinar | Asian Casino Outlook 2022: Challenges and Opportunities

Global Gaming and Casinos Industry Specialist, Casino Business Review LLC

Howard J Klein

Global Gaming and Casinos Industry Specialist

<ul>
<li>The stock has been hammered YTD by sector pandemic woes but this has disguised its superb asset base with its Vegas properties having been sold for US$6.2b, part of the proceeds of which will be invested in  third Asian nation by 2022.</li>
<li>Since the death of visionary founder Adelson, management has been seen as a slow off the mark responder to new opportunities and challenges in Asia.</li>
<li>LVS shares are ~100% down from high early this year as sector investors have yet to see the stock as a buy point on this huge dip.</li>
</ul>


The stock has been hammered YTD by sector pandemic woes but this has disguised its superb asset base with its Vegas properties having been sold for US$6.2b, part of the proceeds of which will be invested in  third Asian nation by 2022.
Since the death of visionary founder Adelson, management has been seen as a slow off the mark responder to new opportunities and challenges in Asia.
LVS shares are ~100% down from high early this year as sector investors have yet to see the stock as a buy point on this huge dip.


Las Vegas Sands: Its an Asian Story Now Still Mispriced and Cheap

<ul>
<li>Having sold its Las Vegas assets for US$6.2B, Sands China Ltd. parent is expected to pivot to a third Asian market as soon as a sustainable post-pandemic revenue pattern becomes evident. It is not a pure play in the space.</li>
<li>Macau has begun a slow, but steady lift of travel bans from Guangdong. Hong Kong easing may not be as far off as many now believe.</li>
<li>The company has just received approval to amend certain covenants in a key US$2b lending facility to assure a more than adequate war chest for sustainability during the pandemic endgame period just ahead and further investment in Asia beyond.</li>
</ul>


Having sold its Las Vegas assets for US$6.2B, Sands China Ltd. parent is expected to pivot to a third Asian market as soon as a sustainable post-pandemic revenue pattern becomes evident. It is not a pure play in the space.
Macau has begun a slow, but steady lift of travel bans from Guangdong. Hong Kong easing may not be as far off as many now believe.
The company has just received approval to amend certain covenants in a key US$2b lending facility to assure a more than adequate war chest for sustainability during the pandemic endgame period just ahead and further investment in Asia beyond.


Sands China Ltd. : Catalysts Currently Still Hidden by Sporadic Pandemic Outbreaks, Time to Buy

<ul>
<li>The stunning Pfizer vaccine announcement days ago can be a psychological game changer for Macau stocks that target mass play most likely to ramp first.</li>
<li>Entry points for these three top picks bear potential for strong upside moves by 1Q21.</li>
<li>A possible shortened Macau recovery cycle is not yet baked into the prices here.</li>
</ul>


The stunning Pfizer vaccine announcement days ago can be a psychological game changer for Macau stocks that target mass play most likely to ramp first.
Entry points for these three top picks bear potential for strong upside moves by 1Q21.
A possible shortened Macau recovery cycle is not yet baked into the prices here.


Macau Gaming: Our Highest Conviction Idea: Speedier Arrival of Effective Vaccine Moves These Stocks

United States

Sands China Ltd. develops, owns, and operates integrated resorts, retail malls, and casinos. The Company also manages convention and exhibition halls in Macau.

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Sands China (SCHYY US)

Wynn Macau (1128 HK) - Gaming Law Revisions and Impact on Financial Covenants

Macau's gaming stocks lost USD18 billion in market value after the Macau administration announced proposed revisions to Gaming Laws. We discuss the...

Jason Yap, CFA

Smartkarma Webinar | Asian Casino Outlook 2022: Challenges and Opportunities

On 6 October, 11am SGT, join us as Howard J Klein goes over his outlook on the casino and gaming sector in Asia for 2022 and presents opportunities...

Smartkarma Research

Las Vegas Sands: Its an Asian Story Now Still Mispriced and Cheap

This asset rich Asian gaming giant is selling so far below its forward prospects even in the early stages of the pandemic recovery that it should...

Howard J Klein

Sands China Ltd. : Catalysts Currently Still Hidden by Sporadic Pandemic Outbreaks, Time to Buy

The sporadic outbreaks of Covid have slowed easing of travel bans. This has kept forward values of Sands China Ltd under the radar. But the...

Howard J Klein

Macau Gaming: Our Highest Conviction Idea: Speedier Arrival of Effective Vaccine Moves These Stocks

Investors do not yet see impact of latest bullish news on vaccine earlier and more effective immunization levels on player confidence to return to...

Howard J Klein

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