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Macau 2022 GGR at 40pct 2019 level at best: S&P Global

Feb 09, 2022 Newsdesk Latest News, Macau, Top of the deck  


Macau 2022 GGR at 40pct 2019 level at best: S&P Global

Macau casino gross gaming revenue (GGR) for 2022 is likely only to be “30 percent to 40 percent” of the 2019 levels seen before the onset of the Covid-19 pandemic, said analysts at Standard & Poor’s Global Ratings in a Monday note. Rising cases of the Omicron variant of Covid-19 and a “tightening of junket activities will likely result in a slower recovery for the gaming sector in Macau,” stated the institution.

In November, the ratings agency said it expected aggregate casino GGR in the Macau market to be between “60 percent to 70 percent” of 2019 levels.

But in Monday’s memo, S&P Global said the Macau gaming market would “recover more gradually than we previously assumed amid rising Omicron cases and tightening junket activities.”

S&P Global assumes mass-market GGR in Macau should improve to “45 percent to 55 percent of pre-pandemic levels”. “The mass market may still recover to near pre-pandemic levels in 2023, assuming travel restrictions ease gradually throughout 2022,” it noted.

But GGR in the VIP segment will stay at 20 percent of 2019 levels during the next two years. “Visibility on the segment’s recovery is low because it is difficult to gauge how much revenue business junkets could bring to Macau under a stricter regulatory environment,” it stated.

Junkets – known in Macau as gaming promoters – historically have introduced high-value players to Macau casinos’ VIP gambling operations.

Macau’s casino junket sector has been in the spotlight since the detention in November of Alvin Chau Cheok Wa, and the shutdown of his junket brand Suncity Group, described previously by investment analysts as the largest VIP operator in the city.

Last month, Levo Chan Weng Lin, boss of junket brand Tak Chun, was also detained. Mr Chan is suspected of being a leader in a triad criminal group, said Macau’s Public Prosecutions Office in a note last week.

Several among the city’s six operators have confirmed that junkets had ceased operations at their respective properties in Macau.

In late January, the Macau gaming regulator said a total of 46 gaming promoters – either entities or individuals – were currently licensed, down from 85 in January 2021. But the bureau said it was still weighing 29 junket licence requests.

In Monday’s note, S&P Global said it had revised its “base case to assume that the resumption of travel between Macau and mainland China in 2022 will be slower” than it had “initially anticipated”, and that the VIP market “will remain weak over the next two to three years”.

“Yet, the predictability of the recovery timeline is less certain because it is hard to know for sure if China will maintain its policies for zero tolerance of Covid-19 into the pandemic’s third year,” stated the institution.

The analysts said they were “confident about a long-term recovery” in the Macau mass market”. They added: “This should support a restoration of credit metrics over the next few years, despite the weakness in the VIP market.”


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