Morgan Stanley cuts forecast for Macau GGR

The bank has revised its forecast due to the new rise in Covid-19 cases in Asia.
The bank has revised its forecast due to the new rise in Covid-19 cases in Asia.

Morgan Stanley now forecasts that Macau GGR will reach nearly 45 per cent of pre-pandemic levels this year.

Macau.- Morgan Stanley has cut its forecast for Macau gross gaming revenue (GGR) this year by 19 per cent to US$16.3bn.

Previously, analysts had said Macau GGR could reach MOP189bn (US$23.6bn), about 65 per cent of GGR reported in 2019. However, the banking group now thinks it will reach just MOP130.19bn (US$16.3bn).

That would be just 45 per cent of 2019 levels, but it would an improvement of 115.4 per cent when compared to 2020.

Morgan Stanley said it had revised its previous forecast due to the new rise in Covid-19 cases in Asia and the delay in in easing travel restrictions between Hong Kong and Macau.

Mainland China remains the only country to have a largely quarantine-free travel bubble with Macau, but the city has resumed a 14-day quarantine for travellers from one district in Guangdong province due to a rise in Covid-19 cases.

As for corporate EBITDA, analysts estimate US$2.89bn, down 37 per cent from its previous prediction of nearly US$4.6bn.

Morgan Stanley said: “Investors are waiting for Macau revenue/profit to normalise, which needs the reinstatement of the mainland’s electronic application system for Individual Visit Scheme (IVS) exit visas, the resumption of group visas, and Mainland-Hong Kong-Macau reopening.”

Bernstein has recently predicted Macau GGR for May will be down by 60 per cent compared to May 2019, previous to the Covid-19 pandemic. As for 2021 as a whole, it still predicts GGR will be about 64 per cent of 2019 levels.

Moody’s Investor Service has recently reported that it believes Macau’s economy could rebound to pre-Covid-19 levels by 2024.

Analysts said that although the special administrative region’s (SAR) economy has been seriously hit by the Covid-19 pandemic, Macau maintains strong sovereign finances.

Moody’s has given Macau an Aa3 rating, which means it is subject to very low credit risk.

It said: “The growth volatility of Macau’s economy is among the highest of all rated sovereigns.

“But despite the highly volatile nature of economic growth, Macao’s vast fiscal and external reserves — significantly stronger than those of similarly rated peers — and very high per capita incomes continue to support its credit profile.”

However, analysts say Macau’s recovery is highly dependent on a full return of tourist arrivals, and the number of visitors is expected to remain at about 60 per cent of pre-pandemic levels through the second half of the year 2021.

MGM China vaccinated 1,200 employees after hosting outreach vaccination services

Casino operators MGM China and Sands China hosted vaccination services last week. MGM saw 1,200 of its employees get vaccinated.

Kenneth Xiaofeng, MGM China President and CFO, stated: “We will continue to talk to the government to see what kind of programmes we might continue to develop.

“We will closely follow the government, directives to make sure more and more employees get the vaccine so that mainland visitors can have more and more confidence in visiting Macau.”

According to Alvis Lo Iek Long, health bureau director, MGM employees will get the second dose of the Covid-19 vaccine 28 days after the first dose.

Melco Resorts has encouraged employees to get vaccinated against Covid-19 through an “immunity incentive programme”.

The company will give each employee a bonus of MOP1,000 (US$125) after getting the vaccine. Those who get the vaccine could also win MOP1m once the company has reached certain immunity targets.

Melco Resorts is working in coordination with the Macau Health Bureau and the Center for Disease Control and Prevention. It is arranging shuttle transportation for staff to attend vaccination appointments and grants staff two full days of paid vaccine leave.

Dr Leong Iek Hou, Novel Coronavirus Response and Coordination Centre coordinator, has revealed that vaccinated residents will be allowed to go to public events such as concerts, sports competitions and festivals without a negative nucleic acid test.

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