JP Morgan reevaluates earnings expectations for 2023 in Macau

Full recovery may happen sometime in the second half of 2023.
Full recovery may happen sometime in the second half of 2023.

JP Morgan has altered its estimated earnings for the first quarter of 2023 for Macau gaming operators.

Macau.- DS Kim, an analyst with JP Morgan, has predicted that Macau’s gaming industry might perform better than it expected during the Chinese New Year break, thanks to the dropping from Sunday January 8 of most of Macau’s Covid-19-related testing and travel restrictions.

Average daily Macau casino gross gaming revenue for the first eight days of January had already reached more than double the daily average achieved in Q422. 

For the first eight days of the new calendar year, JP Morgan estimated Macau daily GGR at MOP2.1bn (US$261.1m), “implying circa MOP260m per day,” wrote Kim, citing industry checks.

“This represents a 30-per cent-plus recovery versus pre-Covid-19 levels, and more than a double fourth quarter or full-year 2022 daily levels, which had been around MOP120m,” he stated.

Kim issued a note on Friday saying “the path to normalcy is now ahead of what we/the market had expected.”

Kim also described his previous estimate of mass market GGR recovering to around 35 per cent of 2019 levels in Q1 and for the Chinese New Year holiday period as “a bit too conservative.”.

The analyst said he now expects Macau’s concessionaires to print positive EBITDA in Q1 and positive free cash flow from Q2, reflecting GGR levels of better than 35 per cent for the March quarter and at least 50 per cent for the June quarter.

“And we wouldn’t be surprised if full recovery (mass/non-gaming GGR going back to 2019 levels) happens sometime in the second half of 2023, much earlier than our current model of mid-2024,” he said.

Macau welcomes 40k visitors on the first day of new Covid measures

According to data released by Macau’s Public Security Police, arrivals jumped to over 39,000, mostly of Chinese visitors from the mainland, while the first day of ferry services from Hong Kong brought in over 2,000 visitors.

The Hong Kong-Zhuhai-Macau bridge also resumed 24-hour service, with both personal vehicles and the bus service between the SARs returning to normal service hours. Currently, buses are running hourly, whereas prior to the pandemic they ran every 15 minutes.

The first ferry in nearly three years departed Hong Kong downtown for Macau yesterday at 80 per cent capacity, Hong Kong media has reported.

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