Brokerage JP Morgan Securities said on Thursday it now expected a new public tender process for Macau casino rights to commence in the third quarter this year, with permits to be awarded in the fourth quarter, ready for a new 10-year licence period coinciding with the start of 2023.
In the third quarter, the Macau government’s “key asks” on investment should be revealed to licence suitors, added analysts DS Kim, Amanda Cheng and Livy Lyu.
The winners of the new concessions were “highly likely” to be “the current six” operators, added the institution.
Lei Wai Nong, Macau’s Secretary for Economy and Finance, said on Thursday that the current six permits would be extended about six months, to December 31. They had been due to end on June 26. He didn’t mention a start date for the tender.
The Macau government has already stated in its gaming law amendment bill – which it says should be passed prior to the issuing of new rights – that there will be no more than six concessions, and no sub-concessions, under the new system.
The JP Morgan team said on Thursday it was “unsurprising” that Macau had decided to extend by about six months.
“As the public tender process – which can only happen after the gaming law is approved – and issuance of the next concessions will likely take at least a couple of months, it’s unsurprising to see the government pushing out the expiry of the current term to avoid any potential issues,” wrote the brokerage’s analysts.
Another brokerage, Sanford C. Bernstein Ltd, said in a Thursday note that each of the six current concession holders might have to pay US$6 million to Macau for a circa six-month extension on the current concession contracts, while the new tender process was prepared and carried through.
Sanford Bernstein analyst Vitaly Umansky stated: “There has not been an announcement of the cost of the concession extension.”
He noted that as part of the 25-month extensions that SJM Holdings Ltd and MGM China Holdings Ltd received in March 2019, to put them on the same finish line as the other four rights holders, the two had been required to pay the Macau government MOP200 million each, or about US$24.7 million.
“The cost of the extension amounted to approximately US$1 million per month of extension,” added Mr Umansky.
“Assuming all operators would be subject to the same fee per month” for the now-announced six-month extension to the current contracts, “each operator would be obligated to pay approximately US$6 million,” wrote the analyst.
