By Kimberley Kao

Hong Kong-listed casino stocks have experienced a surge after Macau's gaming revenue delivered its second-best monthly performance since the pandemic began, buoyed by an increasing number of visitors to the Asian gambling hub.

In January, gross gaming revenue surged by 67% year-on-year to 19.34 billion patacas ($2.40 billion), according to Macau's gaming regulator. This places it just below October's revenue, making it the highest level since January 2020.

Shares of gaming companies far outperformed Hong Kong's benchmark index, with Melco International rising by 6.9% and Galaxy Entertainment, MGM China, Wynn Macau, and Sands China increasing by 5.9%, 5.7%, 4.1%, and 4.2% respectively.

Citi analysts noted in a research note that January's revenue "defied normal seasonality" and slightly exceeded forecasts.

Visitor numbers to Macau nearly quintupled in 2023, reaching 28.2 million people, according to government data. This brings the region closer to pre-pandemic levels as 39.4 million people visited in 2019.

Analysts at S&P Global Ratings anticipate that Macau's mass-market gaming revenue will outperform 2019 pre-Covid levels by 5%-15% this year. In addition, they expect a 20%-30% increase in mass revenue, driven by a rise in visitor numbers and expanded hotel capacity.

Aras Poon, an associate director with S&P, commented in an email that "Positive trends in the mass market will help operators further recover Ebitda and cash flows, and support deleveraging."

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