Macau shuts all casinos for a week amid rise in Covid-19 cases

Analysts believe casinos may see little or no GGR this month or next.
Analysts believe casinos may see little or no GGR this month or next.

Casinos will remain closed until July 18, while analysts fear GGR for the entire quarter is at risk.

Macau.- The government of Macau has decided to temporarily shut casino venues as the number of Covid-19 cases in the latest outbreak passed 1,400. Until now, casinos had remained open, although with limited staffing and close to zero business.

Casinos will remain closed from today (July 11) until July 18. Construction and industrial sites have also been closed. 

André Cheong Weng Chon, Macau’s Secretary for Administration and Justice, said: “This is not exactly a lockdown, we are not banning people from going out. But we hope that with the cooperation from business venues and with the support from the public, foot traffic in our community can be reduced to a minimum.”

Chief executive Ho Iat Seng had agreed with casino operators in 2020 that in the event of any new Covid-19 cases at casino, only that individual venue would have to suspend operations. However, the decision to allow casinos to remain open while all other entertainment venues had been closed was criticised by the New Macau Gaming Staff Rights Association.

The number of Covid-19 cases in the latest outbreak had risen to 1,467 as of Saturday, with 93 new cases detected on Saturday.

Macau casino stocks plunge after temporary shutdown measure

Macau casino stock prices declined after the government announced the measure. Sands China’s shares fell 9 per cent while Wynn Macau’s 7.8 per cent, SJM Holdings by about 6.3 per cent and Galaxy Entertainment’s 6.1 per cent.

JP Morgan Securities (Asia Pacific) Ltd has warned that gross gaming revenue (GGR) for at least the majority of the third quarter may have to be written off.

Analysts said: “We would probably need to write off July and likely August as well from the GGR forecast models, and it is worth revisiting our liquidity analysis under a zero-revenue environment.”

In June, Macau’s gross gaming revenue plunged 25.9 per cent month-on-month, from MOP3.34bn (US$413.4m) in May to MOP2.48bn (US$310m). The figure was down 62.1 per cent year-on-year (June 2021: MOP6.54bn).

Macau’s GGR for the first six months of 2022 combined stands at MOP26.27bn (US$3.26bn), down 46.4 per cent year-on-year. S&P Global Ratings had already predicted that Macau’s casino gross gaming revenue (GGR) will reach only 20 to 30 per cent of 2019 levels this year, equal to MOP87.74bn (US$1.08bn).

JP Morgan said it believes casino operators SJM Holdings Ltd and Sands China Ltd currently have a minimum nine-month liquidity runway through March 2023.

Wynn Macau Ltd, MGM China and Melco Resorts currently have “a year and a half to two years of liquidity” – enough to “weather through zero revenues until mid-2024”. Galaxy Entertainment Group Ltd, has five years’ liquidity, according to the analysts.

Analysts said they expect controlling shareholders to provide funding via shareholder loans, similar to the case of Wynn last month.

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Covid-19 Macau casinos