Deutsche Bank Securities Inc said in a Saturday memo that under its most recent estimates for Macau casino gross gaming revenue (GGR), it anticipated the industry would generate third quarter GGR of US$1.32 billion, equal to a year-on-year decline of 85 percent, with full-year 2020 at US$11.80 billion, down 68 percent year-on-year.
Deutsche Bank forecast under its revised numbers that full-year 2021 GGR would be US$29.49 billion, a 150-percent improvement on the tally it expected in 2020.
Brokerage Sanford C. Bernstein Ltd noted in Monday commentary on Macau GGR: “Forecasts for 2020 remain largely educated guesses at this time with constantly-changing conditions altering expectations.”
But the institution added: “Our current Macau forecast is for 2020 GGR year-on-year decline of 44 percent, followed by a rebound of over 96 percent in 2021.”
If the year-on-year decline in Macau GGR can be slowed to 50 percent in October this year, it would mark an “important” moment for the city’s gambling industry, said a Sunday memo from JP Morgan Securities (Asia Pacific) Ltd.
“This 50-percent mark is important as all six operators can print positive EBITDA [earnings before interest, taxation, depreciation and amortisation], with break-even points hovering around 35 to 45 percent of 2019 levels” of GGR, wrote analysts DS Kim, Derek Choi and Jeremy An.
For July the year-on-year GGR decline was 94.5 percent. The market has been posting 90-percent-plus year-on-year declines since April, according to Macau government data.
“In terms of monthly cadence, we model GGR to fall 85 percent/70 percent in August/September, and 50 percent in October,” stated JP Morgan.
Such incremental improvement might be possible, were the Guangdong authorities to resume issuing exit visas for tourism to Macau this month, said the institution. This would be either under the Individual Visit Scheme (IVS) or for package tours – with a possible start date of “near the end of August”, i.e., approximately two weeks after all Chinese provinces were due, from August 12, to resume issuing non-tourism exit visas to Macau, said JP Morgan.
Judged on a quarterly basis and year-on-year, the brokerage anticipated Macau GGR would recover to 55 to 60 percent of 2019 levels in the fourth quarter; to 85 percent in the first quarter 2021; and 90 percent of 2019 levels in second-quarter 2021, “before finally hitting 100 percent in third-quarter 2021”.
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”Any reduction in [Macau gaming] tax would be positive for future profits and cash flows, all else equal”
DS Kim, Amanda Cheng and Livy Lyu
Analysts at brokerage JP Morgan Securities (Asia Pacific)