The darkest moment for betting stocks has passed

Gaming revenue in December 2020 was 7.818 billion Australian dollars, down 65.8% year-on-year, which was the smallest month since the outbreak alert was sounded in February 2020. In January 2021, Macau's gaming revenue reached 8.024 billion Australian dollars, down 63.7% year-on-year, and the decline continued to shrink. It can be seen that there is a high probability that June 2020 will be the worst time for gaming in Macau, and the darkest moment has passed.

From the perspective of tourists, in 2019, mainland tourists accounted for 70.9% of tourists visiting Australia. As the mainland has resumed individual travel and tour group endorsements in stages, including the resumption of visas for Pearl River residents to visit Australia on August 12, 2020, August 26 The Guangdong Province travel endorsement was resumed on September 23, and the national travel endorsement was resumed on September 23. The biggest negative factor affecting the gaming industry has been eliminated.

Beginning in August 2020, the number of mainland visitors to Macau has gradually increased. By November, it had recovered to 636,400, a 78% year-on-year decline, which was the smallest drop since the decline in February.

The hotel occupancy rate rebounded to 44%, a significant increase from the single digits in June and July.

At present, manual endorsement and nucleic acid testing are the main reasons for the slow recovery of the gaming industry. Passengers need to make an online appointment 1-3 working days in advance, and then go to the window to handle it manually. Approval takes about 7-10 days, and finally sent to the testing center for processing Nucleic acid detection is valid for 7 days. In the future, as the epidemic in Hong Kong eases significantly, it is expected that the Mainland will resume self-service endorsements and extend the validity period of nucleic acid testing, which will become a catalyst for the accelerated recovery of the gaming industry.

Bargain hunting

The betting industry is in keeping with the human nature of gambling. Unless the government bans this business model, there is a high probability that it will continue. Because of the setting of the odds, under the law of large numbers, as long as the bookmaker has enough people to play, betting is a business that makes money without losing money.

Therefore, such a business, if there is no black swan incident, it is relatively difficult to buy at a cheap price. Anti-corruption in 2014 was a black swan incident, and the current epidemic is another.

As the epidemic subsides in the future, the revenue of gaming companies will eventually return to normal.

For betting companies, under the epidemic, the most worrying thing is the liquidity of gaming companies. But for now, this issue does not need to be worried. Gaming companies can still successfully issue bonds to replenish their cash levels under the industry downturn. For example, Sands China has cash and unutilized credit facilities of US$3.06 billion, which enables the group to support 19.1 months of operations under extreme conditions of zero income, while Galaxy Entertainment’s liquidity enables the company to support 71.8 months under extreme conditions. Operations.

So to sum up, the business model of gambling will continue. The epidemic is only a short-term episode. The cash flow of several giants can still support business operations for at least one year under extreme circumstances. Considering that the darkest moment of the industry has passed, at this time Layout them, the space down is limited, as long as there is good news about the epidemic, the stock price will be easily catalyzed.