Macau gaming bill positive to sector: brokerages
Several brokerages covering the Macau casino sector say a bill proposing a new regulatory system for gaming – announced by the local government on Friday – is a positive development for the industry.
“The proposed changes should give investors some relief from the uncertainty around Macau’s future,” said Sanford C. Bernstein Ltd in Hong Kong. “We do not see anything overly negative stemming from the proposed law changes,” analyst Vitaly Umansky wrote in a report on Friday.
A summary of the new bill was presented by Macau’s Executive Council, an advisory body to the city’s Chief Executive, during a press conference on Friday. The document proposes a a maximum of six casino concessions. It added that the concession period would be a maximum of 10 years, but it could be extended by a further 3 years under exceptional circumstances.
The Macau government has said that an update to the gaming regulatory framework would take place prior to a fresh public tender for Macau casino rights. The current licences expire in June.
JP Morgan Securities (Asia Pacific) Ltd said in a note following the announcement by the Macau authorities that, while “we can’t say all the licence risks are gone… most of the key concerns – gaming tax, dividend and government delegate among others – should be greatly alleviated if not removed with this conference.”
“We were surprised the government’s stance on some contentious topics has become far less onerous, if not surprisingly accommodative, in this draft gaming law, versus initial plans,” added analysts DS Kim, Amanda Cheng and Livy Lyu.
On Friday, the Executive Council spokesperson, André Cheong Weng Chon, stated the Macau government had no plans for tax hikes regarding the gaming industry.
The Macau government had previously suggested a need to approve dividend distribution to shareholders by the city’s casino operators. There was no reference to such proposal in Friday’s press conference: it was only stated operators would need to give prior notice to the government of major financial decisions.
Mr Cheong, who is also Macau’s Secretary for Administration and Justice, confirmed during the press conference the local authorities had dropped a proposal to appoint “delegates” to Macau’s gaming concessions.
Daiwa Capital Markets Hong Kong Ltd stated in a note that the “details of the new gaming law discussed by the Macau government suggest that they have followed through on most of the original proposed amendments from the public consultation”. That was a reference to a 45-day public consultation process that ended October 29 last year, regarding Macau’s draft proposals for amendments to the city’s gaming law.
“Overall, we view the press conference was positive on the whole,” said Daiwa analysts Andrew Chung and Terry Ng.
Brokerage B. Riley Securities Inc stated in a report issued on Friday that “while the weak operating environment of Macau should persist due to start-and-stop Covid-19 restrictions and a somewhat disorderly unwinding of the VIP market, for those more interested in the long-term mass gaming and overall ‘Macau story,’ [Friday’s] announcement should be taken as welcome news.”
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