Macau casino operators are enjoying a strong revival in the stock market with analysts taking a “glass half-full” approach to their outlook, as the benefits of Beijing’s zero-Covid pivot started to show in their latest reports to investors. Shares of Galaxy Entertainment and peers including Sands China and MGM China climbed by 3 per cent and 9.2 per cent in Hong Kong on Thursday, outpacing the Hang Seng Index’s 1.6 per cent gain. A Bloomberg index tracking the six listed incumbent operators rose 4 per cent, the most in five weeks. Gross gaming revenue (GGR) jumped last month by 83 per cent to 11.6 billion patacas (US$1.4 billion) from a year earlier, according to government data, the first time volume has surpassed the 10 billion patacas threshold since May 2021. While it was only 46 per cent of the pre-pandemic volume in January 2019, analysts said the future is promising following encouraging signs of visitor arrivals during the Lunar New Year holiday last month as tourists returned to the world’s biggest gambling hub. “January GGR results have been a pleasant surprise to the market,” Kenneth Fong, an analyst in Hong Kong at Credit Suisse, said in a report earlier this month. Positive newsflow and improvement in revenue could lift sentiment and share price performance going forward, he added. China eased its zero-Covid curbs from late November before officially scrapping the policy in early January. The swift reopening of the economy caught the market off guard, fanning a US$1.5 billion stock rally across Hong Kong’s equity market until the Lunar New Year holiday. Is zero-Covid pivot making Chinese stocks an easy one-way bet for 2023? The casino industry recorded 380 million patacas per day in GGR between February 1 and 5, according to Jefferies. This could reach 49 per cent of pre-pandemic levels at 390 million per day this year, and 64 per cent or 508 million next year, the brokerage forecasts. Investors should look past the latest reports showing continued losses incurred by the operators in the final quarter of 2022 as they were “well expected,” according to JPMorgan Chase. MGM reported a US$55 million loss while Wynn Macau suffered a US$59 million setback. The fourth-quarter reports are a “non-event” as the focus will shift to their positive commentary outlook, said Andrew Lee, an analyst at Jefferies in a research note on Wednesday. Investors would have to see if the holiday-induced recovery in January can extend into February and March. A key to that will be wider travel options as border restrictions are removed at all entry points within China, and international flights are restored and normalised, analysts said. China’s cross-border trips at 3-year high as Hong Kong, Macau open up fully Craig Billings, CEO of Wynn Resorts, said the firm was pleased to experience “a meaningful return of visitation and demand” during the recent Lunar New Year holiday in late January, adding the firm is well positioned for success in Macau’s next phase of growth. Macau’s government signed contracts with six companies to renew their casino licences for 10-years , and the operators have pledged to spend US$13.5 billion outside their core business to help diversify the local economy. “We remain comfortably bullish on the sector, as we view current valuations as compelling,” DS Kim, an industry analyst at JPMorgan, said in a report on February 6. “We still see good headroom in terms of both earnings and valuations, and thus for share prices.” Additional reporting by Li Jiaxing