Las Vegas Sands (NYSE:LVS) CEO Rob Goldstein is comfortable with the gaming licensing situation in Macau, and believes it’s just a matter of time before the world’s largest casino center rebounds.
Goldstein made the remarks at Bernstein’s 38th Annual Strategic Decisions Conference, noting the issue of gaming permit renewal – a significant hurdle for the six Macau concessionaires in 2021 — is more tolerable today. The LVS boss also sees positivity in new regulations in the gaming hub.
I don’t think we should be concerned about the nuance of the gaming law. If anything, it’s getting better for the operators. I think it’s very favorable, and we shouldn’t complain. Everyone gets a new license; life goes on,” he said at the conference.
Because of the coronavirus pandemic, Macau authorities cannot earnestly tackle the issue of permit renewals this year. In March, it was revealed that the six concessionaires will pay about $6 million apiece to have their licenses extended through the end of 2022.
Macau a ‘Black Box’ for Investors
Casino stocks of all stripes are out of favor this year. But those with Macau exposure are among the most repudiated, because China implemented a harsh zero coronavirus policy, which included severe travel restrictions.
That policy is frustrating executives, including Goldstein, as it keeps would-be travelers at home in mainland China. However, Macau gaming venues are open, and operators are enduring significant cash burn as they wait for normalized travel trends to return.
“Macau remains a total black box for the operators with exposure. There are no clear indicators as to when the Chinese market will fully ease their restrictive COVID measures, which should help drive the return of ‘normal’ business patterns to Macau,” says Stifel analyst Steven Wieczynski in a recent note. “At this point, Macau operators are working on re-imaging or reengineering their business models for when the market opens back up.”
For his part, Goldstein believes Beijing is effectively managing the COVID-19 crisis, and that Chinese policymakers are being open with gaming operators.
“I think the government has done a good job, and the government has provided us with a lot of guidance. I won’t publicly talk about what’s happening in the inner circle. But I think all the operators have been rewarded for their patience and persistence, going through this whole thing,” he said at the Bernstein conference.
Optimistic About Macau Rebound
Sands China, the Macau arm of Las Vegas, operates six integrated resorts in the special administrative region (SAR), meaning its fortunes are highly tethered to a rebound there.
Goldstein says it’s “unthinkable” that such a recovery won’t materialize.
“I’m a huge believer in China and the resurrection of the market,” he said at the conference.
He adds that Marina Bay Sands (MBS) in Singapore could return to pre-coronavirus levels prior to China fully reopening.
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