The Instinet research arm of stockbroking firm Nomura says mid-week casino demand has “recovered quickly”, following disruption caused by Typhoon Mangkhut over the weekend.
“We have spoken with a number of operators over the last few days and believe post-typhoon trends in Macau have already normalised,” Nomura analysts Harry Curtis, Daniel Adam and Brian Dobson wrote in a note issued on Wednesday.
“Unlike Typhoon Hato, which struck Macau last year, we understand there was minimal damage to the city’s infrastructure from Typhoon Mangkhut,” they added. “As a result, we do not expect the same lingering, negative, post-typhoon impact that affected Macau GGR [gross gaming revenue] last year to repeat.”
Typhoon Hato struck the city on August 23, 2017 with wind speeds of 200 kilometres per hour (124 mph), leading to 10 deaths in the city and widespread damage to infrastructure that disrupted the city’s tourism industry for more than a week afterwards. A number of gaming resorts also reported having partially to reduce their operations following the storm. Some gaming venues had their operations suspended for several weeks, due to damage caused by the typhoon.
Typhoon Mangkhut – the strongest storm to impact Macao this year – struck the city on Sunday. The storm brought adverse weather conditions, and severe flooding to several of the city’s low-lying areas.
As of Wednesday morning, all casinos in Macau were back to business.
“Although post-typhoon demand has already bounced back, our analysis… suggests the mandatory suspension of casino operations over the weekend could impact September GGR growth by approximately 500 basis points (negative),” the Japanese brokerage confirmed in its Wednesday note.
On Monday, Nomura had issued a note saying it had reduced its forecast of Macau GGR for September to MOP23.44 billion (US$2.9 billion), or 10 percent more than a year ago, from its previous estimate of MOP24.5 billion, or 15 percent growth.
“The approximately 500 basis points of negative typhoon-related impact to September GGR growth approximates to around US$30 million of negative EBITDA [earnings before interest, taxation, depreciation and amortisation] impact market-wide,” Nomura said.
It added: “By operator, we estimate the potential third quarter EBITDA impact from the typhoon as follows: Las Vegas Sands Corp – US$8 million, Wynn Resorts Ltd – US$4 million, Melco Resorts and Entertainment Ltd – US$4 million, and MGM Resorts International – US$3 million.”
U.S.-based Las Vegas Sands is the parent firm of Macau casino operator Sands China Ltd. Wynn Resorts – also based in the United States – controls Wynn Macau Ltd, which runs two casinos in Macau. U.S.-based MGM Resorts is the controlling shareholder of MGM China Holdings Ltd, also with two casino properties in Macau. Melco Resorts is the operator of City of Dreams Macau, Studio City and Altira Macau.
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Analyst at Roth Capital Partners