Brokerage Sanford C. Bernstein Ltd said in a Monday note it did “not expect” a unit of global casino operator Genting Malaysia Bhd to win “an outright” Macau concession and displace a current veteran of the market in the current public tender process.
But analysts Vitaly Umansky and Shirley Yang said the brokerage could envisage Genting “positioning itself to be a prospective rescuer,” in the event that an incumbent concession holder “experiences financial difficulties and may require a partner”.
GMM Ltd, an indirect unit of Genting Malaysia, submitted on September 14 a proposal for one of the up to six new 10-year Macau gaming concessions slated to start on January 1, 2023. On September 16 – after formally opening all submissions to the tender – the Macau authorities said that proposals by the six incumbent operators had been accepted unconditionally, but that the acceptance of GMM’s was “conditional”, without giving further details.
“We believe Genting is positioning itself as a prospective partner or buyer of an existing operator in the event that a concession holder experiences financial difficulties and may require a partner or could be open to being acquired, with government consent,” wrote Sanford Bernstein.
All Macau’s current operators have experienced cash burn recently, amid start-stop recovery to the city’s gaming market, linked to China’s ‘zero-Covid’ policy, with some operators having a stronger liquidity outlook than others.
The brokerage observed in its Monday note that Macau daily gross gaming revenue (GGR) for September 13 to 18 “dropped post the Mid-Autumn Festival,” a Chinese holiday period, at only MOP75 million (US$9.3 million), down 20 percent week-on-week compared to the MOP94 million average daily rate during September 5 to 12.
“Near-term GGR recovery will remain tepid as the Chinese government continues strict travel policies for long-distance travellers,” wrote Mr Umansky and Ms Yang.
The Sanford Bernstein analysts noted there had been “commentary in Macau and financial press” that Genting’s appearance in the tender scenario was “negative for Wynn [Macau Ltd] as some consider it to be the most vulnerable of the group” of incumbents.
“We tend to disagree and would point to SJM [Holdings Ltd] as having the most issues,” said the brokerage.
In terms of Genting getting a real estate presence in Macau, Sanford Bernstein said it did not have clarity on what “residual ownership” the Genting group might have in a 600-room hotel without casino being developed near the old Lisboa Hotel on Macau peninsula. A portion of ownership belonging to the now-in-liquidation Genting Hong Kong Ltd had been sold off, it was announced early last year.
Sanford Bernstein said there had been commentary about the Genting group “having a good relationship with Chinese authorities,” and having “sponsored” the development of the Genting Snow Park ski resort in mainland China’s Hebei province, which had been used as one of the venues for the 2022 Winter Olympics.
That, and Genting’s experience of running non-gaming – particularly theme parks, at Resorts World Genting in Malaysia and Resorts World Sentosa in Singapore – might work in Genting Malaysia’s favour, wrote Mr Umansky and Ms Yang.
But Sanford Bernstein said it did “not view as very likely” that an outright Macau concession for Genting would be “achievable in the next two to three months”.
