Macau saw sequential weekly improvement in its casino gross gaming revenue (GGR) for the period March 8 to 14 inclusive, amid some increase in visitor volume from mainland China, said several brokerages in respective Monday notes.
“Macau GGR during the second week of March improved slightly from the first week, even as VIP hold dropped below normal,” said Sanford C. Bernstein Ltd.
“China has eased travel restrictions as their Covid- spike from January and February has come under control. We expect visitation and GGR to slowly improve during March and April,” added analysts Vitaly Umansky, Kelsey Zhu and Louis Li.
“Month to date, GGR has recovered to 30 percent-plus of pre-Covid[-19] levels… with mass and VIP hovering at around 40 percent and 20 percent, respectively, compared to March 2019,” wrote JP Morgan Securities (Asia Pacific) Ltd analysts DS Kim and Derek Choi, in their Monday note.
JP Morgan estimated Macau GGR for the first 14 days of March at MOP3.7 billion (US$462.7 million), or MOP264 million per day, versus approximately MOP260 million a day in the first two months of this year.
The average daily GGR run rate was MOP271 million in the past week, also an improvement from the first week of March and the last week of February, the JP Morgan analysts suggested.
“This probably reflects gradually improving travel sentiments in China, as well as a comeback of local… gaming demand after recent easing of the Covid-testing rule,” for entry to Macau casinos, the JP Morgan analysts noted in their Monday memo.
Macau’s tally of visitor arrivals is expected to “increase slowly” over the coming months, and might see a “jump” when processing of mainland exit permits for trips to Macau under China’s Individual Visit Scheme (IVS) “switches back to e-visa”, said Sanford Bernstein.
“We are not likely to see material alleviation of bottlenecks in the near term” regarding visa processing, suggested Sanford Bernstein.
“Group visa travel from China will also need to resume to drive recovery,” added the brokerage, referring to the ongoing suspension of guided group tours from the mainland.
The institution forecast Macau’s March GGR to be down “in the mid-60s percent” compared to the same month in 2019.
Macau GGR recovery is likely to pick up pace in the second half this year, suggested JP Morgan and Sanford Bernstein.
“The pace of recovery should step up sharply from the next big holiday (May Golden Week) in our view, and further accelerate into the second half,” the JP Morgan team suggested.
Possible catalysts included “relaxation of cross-province travel restrictions,” and “Hong Kong border reopening,” said the institution.
The latter was a reference to the fact that while the Hong Kong boundary is not technically closed, those permitted to enter Macao from Hong Kong must undergo a quarantine. People coming from Macau must also do a period of quarantine if they wish to enter Hong Kong, unless they are Hong Kong residents and are eligible for quarantine-free entry.
JP Morgan estimated Macau’s mass GGR would recover to either “70 percent to 75 percent, or 85 percent to 90 percent” of pre-Covid-19 levels in the third quarter or the fourth quarter this year, before reaching a full recovery to pre-pandemic levels, by 2022.
Sanford Bernstein also expected “strong improvement” beginning in the second half of this year, with Covid-19 related travel constraints gradually lifted.
“We forecast GGR in 2021 to increase to approximately two-thirds of 2019 GGR (+225 percent year-on-year from 2020), with mass rising to over approximately 75 percent and VIP rising to only approximately 50 percent of 2019 levels,” the Bernstein analysts wrote.
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"The Macau recovery continues to be disrupted by false starts, while the lack of [Chinese] public holidays for rest of the year should cap the pace of the rebound”
Andrew Lee and David Katz
Analysts at brokerage Jefferies LLC