Macau VIP gross gaming revenue (GGR) for the second quarter has been estimated by a brokerage at only about 20 percent of pre-pandemic levels, and “virtually negligible for the sector’s profit and cash flows”.
JP Morgan Securities (Asia Pacific) Ltd gave the view in a Thursday note, following the official release of the June GGR numbers, which showed last month’s tally – including mass-market and VIP gaming – down 37.4 percent month-on-month.
Analysts DS Kim, Derek Choi and Livy Lyu wrote regarding the second quarter as a whole: “VIP GGR shows no sign of improvement at only approximately 20 percent recovery levels – same as in the first quarter.”
They added: “We note mass/slot now comprise 77 percent of GGR, making the VIP segment virtually negligible for the sector’s profit and cash flows.”
The official split between the VIP and mass segments for the second quarter is yet to be published by the Macau government.
JP Morgan estimated second-quarter VIP GGR at MOP5.73 billion (US$716.3 billion) and mass-market GGR, including slots, at nearly MOP19.65 billion.
The brokerage said the second quarter “still managed to print the highest GGR since the pandemic, thanks to a robust May and a solid recovery in mass”.
The analysts said second-quarter headline GGR grew 7 percent quarter-on-quarter, to MOP25.4 billion. That represented a “MOP279-million per day run-rate and 35 percent recovery versus second-quarter 2019.”
The team added regarding the three months to June 30: “By segment, we estimate mass GGR grew 13 percent quarter-on-quarter to reach approximately 45 percent of pre-Covid second-quarter 2019’s, a further recovery from approximately 40 percent in the first quarter.”
JP Morgan said it was making no change to its July forecast, “notwithstanding recent reports that a Hong Kong-Macau travel bubble may launch in mid-July”.
Currently, only mainland China has a largely quarantine-free travel bubble with Macau.
The JP Morgan analysts stated regarding possible further easing of travel arrangements: “We keep our forecasts unchanged given the unpredictability of these policy measures.
“As such, we model GGR to be MOP8.5 billion to MOP9.0 billion in July, only 35 percent versus pre-Covid levels, similar to April’s,” further noted the institution.
Carlo Santarelli, of Deutsche Bank Securities Inc, observed in a Thursday memo after Macau’s June GGR result, that he now forecast third quarter GGR in Macau to reach US$4.28 billion, compared to a prior estimate of US$4.70 billion.
