MGM China and Melco Resorts in Macau are recovering from COVID-19 restrictions at a faster pace than their competitors

According to earnings reports from the "Big Six" operators in Macau, the Chinese division of American gaming giant MGM and the casino owned by Hong Kong magnate Lawrence Ho, Melco, have outperformed their competitors during the "zero COVID" policy era. Despite a revenue decline of more than three-quarters compared to 2019, MGM China and Melco Resorts are showing the strongest recovery in China's only gaming enclave.
A key indicator of their success is the surge in their stock prices: MGM China's shares have risen by 114% over the past six months, while Melco Resorts and Melco International have seen increases of 144% and 81%, respectively. The other four companies in Macau's "Big Six"—Galaxy Entertainment, Sands China, Wynn Macau, and SJM Holdings—also reported stock price increases ranging from 23% to 55%.
It's worth noting that in 2019, Macau, not Las Vegas, was the global leader in gaming revenue. However, strict pandemic-related restrictions led to the closure of gaming establishments, allowing the American city to take the lead. Now, following the lifting of most restrictions in December and the recent removal of mask mandates, the gaming business in Macau is gradually recovering.
D.S. Kim, an analyst for JPMorgan, predicted that by the end of 2023, total gross gaming revenue in Macau could return to over 50% of pre-pandemic levels. However, a 33% increase in February compared to the previous year has already exceeded expectations, indicating that the positive results were not solely driven by the Lunar New Year rush.
Nonetheless, the years of COVID-related restrictions have left their mark. For instance, Melco reported a total debt of $8.4 billion at the end of last year, up from approximately $4.4 billion in 2019. However, Lawrence Ho stated during a recent conference call that "the company's number one goal for the next two to three years is to fully pay down its debt."
Meanwhile, Affinity Interactive has announced the sale of Rail City Casino in Sparks, Nevada.