Macau casinos are set to reopen on Saturday from a Covid lockdown. That is good news for U.S.-based casinos with major operations in the south China gaming enclave. Las Vegas Sands (LVS) stock added to its gains after-hours, despite reporting mixed second-quarter results.
The Chinese government shuttered Macau casinos for a week on July 11 to curb an uptick in Covid cases. That was the first time in the more than two-yearlong pandemic that Macao casinos were closed.
Of the big U.S.-based casinos, Las Vegas Sands and Wynn Resorts (WYNN) have more exposure to Macau than MGM Resorts (MGM), which owns half the casinos on the Vegas Strip.
LVS stock and other casino peers were hit hard during the pandemic. But with the reopening of casinos in Las Vegas and Covid restrictions largely gone, a slow recovery has begun. Yet, with inflation rising, many Americans are now cutting back on travel spending. Additionally, while business travel and conventions have restarted, they have yet to return to normal.
While Macau casinos will reopen on July 23, industry watchers say there won’t be much business returning at first. Many Covid restrictions remain in place. The partial reopening of casinos, restaurants, cinemas and other businesses will proceed slowly amid massive testing, according to a Reuters report, citing government officials.
Government officials have restricted travel to and within China for months. But they hadn’t closed Macao casinos until earlier this month.
Las Vegas Sands CEO Robert Goldstein, speaking at a conference in Las Vegas on June 1, had hoped travel restrictions to Macau would ease.
“I’m disappointed we haven’t gotten open thus far,” he said at the time. “I’m hoping that China might consider opening Macao and Hong Kong before the rest of the region of the world, so they will get the benefit of a bit earlier when that day comes.”
Earnings: Las Vegas Sands
Las Vegas Sands reported earnings after the market close on Wednesday.
Estimates: FactSet analysts expected LVS to trim losses to 26 cents a share vs a 29-cent loss a year ago. Analysts projected revenue to come in at $957.2 million, an 18.4% decline from last year.
Results: Revenue of $1.047 billion topped expectations. A loss of 34 cents per share undercut analyst views by a wide margin.
“Pandemic-related restrictions continued to impact our financial results” during the quarter, CEO Goldstein said in a statement. But Singapore showed firm signs of recovery, driving operating earnings of $319 million at the city’s Marina Bay Sands casino.
Capital expenditures during the second quarter totaled $198 million, including construction, development and maintenance activities of $97 million at Marina Bay Sands and $67 million in Macao.
Shares jumped 2.5% in after hours trade, after gapping up 4.4% to 37.08 during the regular session on the stock market today. LVS stock is still 26% below its 52-week high of 46.93. But the stock has pulled back above its 50-day line in recent days, according to MarketSmith.
Las Vegas Sands’ relative strength line is ticking upward. However its RS Rating is just 57 out of a best-possible 99. LVS stock has an EPS Rating of 14, as it doesn’t expect to turn a profit until Q4.
Wynn stock popped 4% to 61.92, peeking above its 50-day line. MGM stock gained 2.7%. U.S.-focused Caesars Entertainment (CZR) climbed 5.7%.
All three stocks rose less than 1% in afterhours action.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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