In a Thursday note following publication of Las Vegas Sands’ 3Q22 financial results – which saw the company’s Macau subsidiary Sands China report a widened US$152 million EBITDA loss – analysts John DeCree and Max Marsh said they currently assume Macau will recover to 50% of pre-COVID levels next year but suspect that number will “more likely need to be revised downward than upward given China’s commitment to zero-COVID.”

“While we remain hopeful that group tours and e-visas get reinstated by the end of the month or early November, it remains unclear if visitation to Macau will accelerate given Beijing’s unwavering commitment to its zero-COVID policy,” they said.

“As Las Vegas Sands management indicated, it continues to be increasingly difficult to forecast a recovery with any degree of confidence. We continue to expect a gradual recovery, though with little visibility on timing.

“Without signs of herd-immunity or broad distribution of an effective mRNA vaccine, we think a rapid reopening will be unlikely.”

While the analysts described Las Vegas Sands as a defensive play for investors given the contrasting fortunes of the company’s Singapore property, Marina Bay Sands, the downgrading of Macau EBITDA estimates for 2023 highlights material uncertainties over and above the issue of COVID-zero.

“We still believe the Macau recovery will remain elusive for most, if not all, of 2023,” write DeCree and Marsh.

“Moreover, we are not yet convinced that returning to 100% of 2019 GGR is a realistic target for Macau over the medium term given the substantial policy moves, including the virtual elimination of the junket system and strict positioning from the mainland against offshore gambling.”