Macau gaming operators could see a sequential recovery in business post-coronavirus throughout 2021. Market-wide the firms could see by the end of that year casino gross gaming revenue (GGR) getting back to approximately 80 percent of 2019 levels, said Union Gaming Securities LLC in a Thursday note.
Analysts John DeCree and Sam Ghafir said the institution was nonetheless “cautious” on the Macau market especially in the near term, in light of the current travel restrictions involving Macau, Hong Kong and mainland China during the coronavirus pandemic and its associated infection Covid-19, and the lack of clarity about when that might be lifted.
Travel restrictions enacted by the city and authorities in mainland China could contribute to “a quicker and more sustainable recovery”, by helping to stop the disease Union Gaming remarked. “However, in the interim, the impact of unprecedented GGR declines and cash burn experienced by all concessionaires in the market seems to be underappreciated” by investors, the brokerage wrote in the Thursday note.
The brokerage expected that Macau’s GGR decline in April could be “more pronounced” than the 80 percent year-on-year decrease seen in March. March GGR was just under MOP5.26 billion (US$658.3 million). The result put the city’s first-quarter GGR decline at 60.0 percent year-on-year, to just under MOP30.49 billion, according to official data.
“In general, we are forecasting Macau GGR to decline approximately 75 percent in second-quarter 2020 across the board, by about 45 percent in third-quarter 2020 and 25 percent in fourth-quarter 2020,” Union Gaming’s Mr DeCree and Mr Ghafir wrote.
“We forecast a sequential recovery throughout 2021 with operators largely getting back to approximately 80 percent of 2019 GGR benchmarks by year-end. Our overall market estimate may seem overly conservative, but at this point there is just no visibility and we find it prudent to be more cautious,” the brokerage noted.
The brokerage also said it broadly expected Macau gaming operators’ 2021 earnings before interest, taxation, depreciation and amortisation (EBITDA) to recover to approximately 80-percent of 2019 levels.
