A brokerage said in a Monday note it “won’t try to predict” the level of casino gross gaming revenue (GGR) recovery for Macau in 2022.
It would “hinge on the pace and level of travel normalisation around the region, and we now know we can’t predict it,” said the memo from JP Morgan Securities (Asia Pacific) Ltd, referring to the potential for outbreaks of Covid-19 in either mainland China, Macau or Hong Kong.
In commentary on the full-year 2021 GGR numbers for Macau, released by the city’s government on Saturday – and which showed 43.7 percent GGR improvement judged year-on-year – the institution estimated mass-market GGR recovered to 37 percent of 2019’s pre-pandemic trading, compared to 23 percent of 2019 in 2020.
Macau’s year-on-year gain came despite a number of disruptions to tourism business in the second half of the year, due to community cases of Covid-19.
The city’s 2021 VIP GGR was only 17 percent of 2019’s, the same level as 2020, suggested analysts DS Kim, Amanda Cheng and Livy Lyu.
Those 2021 figures were under “half of what we and the market had expected a year ago,” added the JP Morgan team.
“We had modelled mass and VIP GGR would recover to 75 percent and 35 percent of 2019’s in 2021, which was actually more conservative” than investor consensus at that time, “and frankly we feel less confident about our numbers now than a year ago,” stated the analysts.
Brokerage Sanford C. Bernstein Ltd said in a Monday memo it forecast January GGR to be down 71 percent versus January 2019, and down 9 percent month-on-month against December, with “mass strength offsetting VIP weakness”.
“The wild card will be any travel restrictions from China or a Covid outbreak in Macau,” stated analyst Vitaly Umansky.
He added that the Chinese New Year holiday in mainland China would run from January 31 to February 6 this time, and that the “weeks leading into Chinese New Year are typically soft” in terms of Chinese consumer demand for trips to Macau.
Regarding the impact of Suncity Group’s – and potentially other junket brands’- exit from the Macau VIP gambling market, JP Morgan stated concerning December’s result: “If we assume junket VIPs were near-zero, the print suggests mass GGR has recovered to 45 percent to 50 percent of pre-Covid levels, better than 35 percent to 40 percent recovery,” during the first 11 months of 2021.
Sanford Bernstein stated regarding December GGR: “VIP wound down significantly this month on the back of the Suncity closure and other junkets’ business slowing down: however, visitation into Macau has held up well and was further boosted by the year-end holiday week.”
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”As the Macau gaming revenue structure is now leaning heavily towards the mass business … once the border fully reopens, the recovery from mass should drive the sector to bounce more swiftly”
Vitaly Umansky, Louis Li and Shirley Yang
Analysts at Sanford C. Bernstein