Get ready for an L-shaped recovery of gross gaming revenue (GGR) in Macau, warns brokerage Wells Fargo Securities LLC.
“We’re seeing more evidence supporting a flat versus V-shaped recovery,” Wells Fargo analysts Cameron McKnight, Rich Cummings and Tiffany Lee wrote in a note issued on Thursday.
They added: “We remain neutral on Macau gaming, and continue to believe stocks will remain range-bound this year as Macau adjusts to the ‘new normal’ of greater government intervention and lower, steadier longer term growth.
“When the macro and policy settings stabilise, we don’t expect a ‘V-shaped’ recovery in Macau revenues as we saw in 2009 and 2013.”
GGR in Macau fell 39.4 percent year-on-year in March to approximately MOP21.49 billion (US$2.69 billion), the city’s Gaming Inspection and Coordination Bureau said on Wednesday.
March was the tenth consecutive month of declines in GGR judged against year prior periods and the second-worst monthly decline on record after the February drop.
The Wells Fargo analysts expect GGR to drop by around 33 percent year-on-year in April and May. They remain cautious about the city’s short-term prospects citing lower volumes in VIP play, with high rollers keeping a low profile amid mainland China’s anti-graft drive.
“Macau average daily revenues have tapered off since January, which aligns with our view that the recovery in Macau will not be ‘V- shaped’,” they stated.
Sep 20, 2021The Macau government should give more detailed information on its proposed new regulatory requirements for the city’s gaming sector, in particular the idea of raising the minimum share capital...
”The Macau government is not aiming to trivialise or drive out the junket sector, but to regulate the sector so that it would not hurt Macau’s reputation”
Alvin Chau Cheok Wa
Chief executive of privately-held VIP junket business Suncity Group