Nomura talks about Macau’s gaming concessions

The Japanese brokerage said that it expects the first round of discussions to involve SJM Holdings and MGM China.

Macau.- Brokerage from Japan Nomura said in a note that it expects the first round of discussions around the refreshment of gaming concessions in Macau to include the licenses of SJM Holdings Ltd and MGM China Holdings Ltd.

According to several investment analysts, nothing but uncertainty surrounds the future of the licenses held by Macau’s six casino operators, which are due between 2020 and 2022. “A source suggests that discussions will begin mid-2018 for SJM and MGM whose concessions are set to expire in 2020, but to the best of our knowledge, no substantive conversations have begun,” said analysts from Nomura.

The brokerage also said that a greater stock price and valuation volatile is expected after the discussions begin, because of a high level of “uncertainty and the earnings before interest, taxation, amortisation and depreciation (EBITDA) that’s at stake.”

“[Operators] agree that they must ‘rebid’; that [the term] concession ‘renewal’ is incorrect in that it does not account for the high bar that the government has set for extending a concession,” said the analysts.

SJM Holdings chief executive Ambrose So Shu Fai said on Sunday that the existing number of casino operators in Macau is enough for the market’s needs, and that controlling the number of lice-dealer gaming tables is important.