Macau casino operators could return to positive EBITDA in Q4

Brokerage JP Morgan believes the resumption of the e-visa system for residents of mainland China could benefit Macau gaming operators.

Macau.- JP Morgan analysts have predicted that Macau casinos could benefit from the return of electronically-issued exit visas for Chinese residents, including the Individual Visit Scheme (IVS) and group tour visas. According to DS Kim, the industry’s mass GGR could recover to 25-30 per cent of pre-Covid-19 levels in the fourth quarter before increasing further in 2023.

He added: “Most operators can turn EBITDA [earnings before interest, taxation, depreciation and amortization] positive when mass GGR hits around 30-35 per cent of pre-COVID levels… indicating some companies can start to print positive profits from 4Q. “

In late October or early November, the Chinese government will resume issuing electronic visas for mainlanders to visit Macau. Package tours will resume in phases starting in November with Shanghai, Guangdong, Fujian, Jiangsu, and Zhejiang provinces. Macau’s chief executive said he hoped the move could double the number of visitors to the city to 40,000 a day.

Macau registered 331,397 visitor arrivals in August amid an easing of cross-border measures between Zhuhai and Macau. According to JP Morgan, before the Covid-19 pandemic, package tourists from mainland China account for about 25 per cent of the city’s total tourist arrivals and 10 per cent to 15 per cent of mass-market gambling revenue.

Analysts believe that liquidity will not be an issue for all Macau gaming operators next year as the market gradually recovers, with the exception of SJM Holdings Ltd due to its capital expenditure for Grand Lisboa Palace.

Macau’s GGR for the first eight months of 2022 combined stands at MOP28.86bn (US$3.58bn), down 53.4 per cent year-on-year. In August, GGR was up 450 per cent, from MOP398m (US$49.2m) to MOP2.19bn (US$270.8m). However, the figure was down 50.7 per cent when compared to August 2021.