UBS bullish on Macau casino operators as Swiss bank expects gaming hub to benefit from pent-up demand

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Once Macau relaxes border controls further, there will be a greater recovery in the gaming sector, says Angus Chan of UBS Global Research

Macau’s gross gaming revenues soared over 1,000 per cent year on year in April to 8.4 billion patacas (US$1.05 billion)

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Analysts are upbeat on the prospects of Macau’s gaming industry, as they expect revenues to surge once the gambling hub fully opens its borders. Photo: Reuters

Martin Choi

Published: 7:30am, 6 May 2021Updated: 1:09pm, 10 Nov 2021

Macau gaming stocks represent a buying opportunity as the sector has upside potential that has not been factored in, according to UBS.

The Swiss bank had earlier upgraded its rating for Macau’s gaming sector to “buy” in March from “neutral” last year, as UBS expects the gambling hub to benefit from the pent-up demand from mainland travellers.

“Relatively speaking, there is value in Macau’s gaming sector, which has underperformed compared to other Chinese discretionary spending sectors and the overall market” over the past year, Angus Chan, head of Hong Kong strategy at UBS Global Research, said on Wednesday.

“We believe there are upsides that have not been factored into the stock price” of the gaming sector, said Chan. “Once Macau relaxes border controls further, there will be a [greater] recovery in the gaming sector. That’s why we recommend buying the sector.”

Macau’s tourism sector has gradually benefited from the increase in tourists from the mainland, helped by zero local Covid-19 infection in some 400 days. Macau’s gross gaming revenues soared over 1,000 per cent in April to 8.4 billion patacas (US$1.05 billion), compared to the same period last year. In the first four months of the year, gross gaming revenue had risen 2.6 per cent from a year ago.

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Visitor arrivals in March, the latest month for which government data is available, showed a 255.4 per cent year on year jump to 754,541 travellers.