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Analyst says despite Macao swoon, Sands stock remains a good bet

A New York analyst is telling investors that Las Vegas Sands Corp. stock remains a good bet.

Carlo Santarelli of the New York office of Deutsche Bank issued a report to investors after the stock market closed Wednesday saying the recent decline in the market could be attributed more to the Macao government’s handling of COVID-19 containment policies than the government’s review of gaming laws and the awarding of casino licenses, called concessions.

Santarelli maintained a “buy” rating on Sands stock in Wednesday’s report.

A Sands spokesman had no comment on the analyst’s report.

Sands issued a Securities and Exchange Commission note earlier this month warning that Chinese government border restrictions contributed to company losses in July and August.

A week later, stocks for Sands, Wynn Resorts Ltd. and MGM Resorts International, all with resort holdings in Macao, nosedived on news that Macao’s government was going to undertake a review of concessions and gaming law. Sands, Wynn and MGM stocks fell 9.8 percent, 10.9 percent and 3.9 percent, respectively, in Sept. 14 trading.

On Wednesday, Las Vegas Sands shares were up 53 cents, 1.5 percent, to $36.12 a share in volume slightly above the daily average. Shares of Wynn closed up $2.02, 2.6 percent, to $80.79 Wednesday on volume slightly above the daily average. MGM shares closed up $2.47, 6.1 percent, to $43.02 a share on volume more than twice the daily average.

“While (Las Vegas Sands) and the Macao-centric stocks in general, haven’t been the shiniest names to own,” Santarelli wrote, “… we do believe the weakness is largely predicated on the slow-to-recover Macao gaming market, given the virus containment policies, and the lingering concerns around the gaming law and concession process.”

Santarelli said the “downside risk from current levels should be fairly limited,” though he warned “that the near term could be choppy.”

Roy Smolarz, an attorney and international investment banker, concurred that it could be rough sledding for investors. He cited the tension that exists between Beijing and Hong Kong and the unrest that has occurred there as reasons to believe the central government could flex its muscle in Macao.

“They have such an opportunity to mandate change and they’ve exercised so little restraint in Hong Kong in mandating change to so many businesses there that conventional wisdom has to buy into the view that some element of meaningful change to the way that U.S. gaming operates in Macao is imminent,” said Smolarz, managing director of Las Vegas-based RS Global Gaming Finance LLC.

The Review-Journal is owned by the family of Dr. Miriam Adelson, the majority shareholder of Las Vegas Sands Corp.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.

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