Macau will take time to recover, analysts say

Nomura analyst says sector will only return to normal when which resumes issuing individual visit schemes.

Macau.- While the reopening of Macau’s casinos tomorrow is welcome news for the sector, analysts are predicting it will take some time for the industry to fully recover.

According to Nomura Instinet analyst, Harry Curtis , the real breakthrough will come when China resumes its individual visit schemes (IVS).

“The consensus among local operators we connected with over the weekend is that there will be little material improvement in visitation, GGR and EBITDA until the IVS and tour group customers are permitted to cross the border, which may not normalize for another six weeks,” Curtis said.

“The reopening is akin to keeping a body alive without the food required to sustain it”, he warned.

In his opinion, reopening casinos is likely driven by the government’s concerns about the actions that operators may take. If the shutdown lasts for longer than 30 days, the operators have a legal basis to furlough workers. 

“In our view, the government(s) will reopen the IVS and tour systems gradually and regionally once no new cases have been identified.”

Operators have already warned of significant daily losses as a result of the shutdown, with Wynn Macau disclosing a daily operating loss of $2.5 million, or $75 million a month, while MGM disclosed a daily loss of $1.5 million. 

Secretary for Economy and Finance, Lei Wai Nong, said the decision to reopen casinos had been made following an extensive assessment of risks.