Could Genting be seeking to partner with a Macau gaming operator?

Sanford C. Bernstein believes Genting’s bid for a Macau gaming concession could be an attempt to gain a partnership with an incumbent concessionaire.

Macau.- GMM Limited‘s surprise participation in Macau’s casino licence retender continues to attract speculation. The Genting-linked company was the only licence applicant that isn’t one of Macau’s six current casino operators. And with all six existing operators expecting to see their licences renewed, people have questioned GMM’s plans.

Sanford C. Bernstein has a theory. The brokerage believes Genting could be seeking to position itself as a potential rescuer “in the event that a concession holder experiences financial difficulties and may require a partner (such as SJM), or a potential buyer of a willing seller in the future,”

GMM’s bid has been accepted on a conditional basis while the other six bids have been accepted without conditions. Bids may be accepted conditionally if documents are submitted without non-essential formalities, or if the bidder has failed to submit the required documents due to justified circumstances beyond its control.

Bernstein considered it unlikely that Genting would gain a concession at the expense of one of Macau’s current casino operators. However, it believes that a financially vulnerable concessionaire, namely SJM, could partner with the Malaysian hotel and gaming group in the future.

Analysts and commentators have long expressed concern about SJM’s liquidity. It’s been the operator with the most difficult financial position since the Covid-19 pandemic began. SJM Holdings reported a net loss of nearly HK$2.76bn (US$351.2m) for the first half of the year.

Both the mass-market and VIP gaming segments performed below expectations, resulting in revenue falling 20.9 per cent year-on-year to HK$4.13bn (US$525.9m). Adjusted EBITDA came in at HK$1.18bn in comparison to a negative HK$510m recorded in the prior-year period.

However, Ben Lee, managing director of IGamiX Management & Consulting, has suggested that if any company loses its licence it’s most likely to be Wynn Macau as it has done the least in terms of developing non-gaming offerings and building bridges with local authorities and Beijing.

It is expected that the results of the public tender for the new 10-year gaming concessions will be ready by the end of the year.