Macau GGR to increase in June, Bernstein says

Bernstein analysts expect gaming revenues to grow once border restrictions have been lifted

Macau.- While the timeline for the loosening of border restrictions remains unknown, the Macau government is putting increasing pressure on China to restart issuing tourist visas.

In an address to Legislative Assembly, Chief Executive Ho Iat Seng said Macau and China were working together to protect the economy of both regions.

According to Ho’s speech, he asked China to increase the number of mainland cities covered by the Individual Visit Scheme (IVS), once the Covid-19 pandemic has been controlled.

IVS will allow mainland Chinese living in eligible areas of the mainland to apply for a travel permit to visit Macau or Hong Kong individually.

If that agreement is achieved, the gaming sector could see signs of improvement by the summer.

Sanford Bernstein said: “The gaming operators and other Macau-based contacts we have spoken with do not see any definitive clarity on timing of recovery” including  “visa situation improvement”.

Analysts added: “We expect GGR to pick up again in May/June with loosening travel restrictions, but any strong near-term recovery is unlikely.”

This forecast is in line with brokerage Nomura, which said last week it might be 2022 before Macau GGR returns to 2019 levels.

JP Morgan Securities (Asia Pacific) Ltd also said in a memo: “We think it’s reasonable to expect 2021 earnings before interest, taxation, depreciation and amortisation to be similar to that of 2019.”

Meanwhile, Macau’s April casino gross gaming revenue (GGR) might contract by as much as 95 percent.

“We estimate April may be down 93 per cent to 95 per cent… assuming no change in travel restrictions,” Bernstein said.

“We estimate VIP has been stronger than mass, with revenue driven by a very small number of players, with very low hold in VIP and significant volatility,” Bernstein analysts, Vitaly Umansky, Eunice Lee and Kelsey Zhu said.

Restrictions during the pandemic crisis on cross-border travel involving Macau, Hong Kong and mainland China had been factors in Macau tourism numbers “dropping to less than a few hundred visitors per day – versus 100,000-plus in normal times,” the analysts added.