Investors are now understanding the return of meaningful tourism volume in the Macau market is likely to involve “small steps every two weeks” on the part of the Chinese authorities – in terms of relaxation of mainland travel policy relative to Macau – said a Thursday memo from Jefferies Hong Kong Ltd.
Possible clues had been provided by a phase of easing that began on July 15, via a relaxation of quarantine conditions for travel from Macau to nine cities in the neighbouring Chinese mainland province of Guangdong, which was then extended to the whole of the province a fortnight later.
“The Macau recovery remains dependent on IVS [Individual Visit Scheme], but we expect this to be a gradual and phased reissuance on an individual Chinese city-by-city within each province,” said Hong Kong-based analyst Andrew Lee.
He added that Guangdong “is key”, given the province accounted for “46 percent and 55 percent” respectively of 2019 and first-half 2020 “mainland Chinese visitors to Macau”, with “73 percent and 69 percent” respectively, of “2019 and first-half 2020 Guangdong visitors using IVS”.
Hubert Wang, president and chief operating officer of Macau casino operator MGM China Holdings Ltd, said on the second-quarter earnings call of the parent MGM Resorts International on Thursday, he thought IVS resumption could come in “mid-September” or even “a little bit earlier”, possibly starting with Guangdong province.
The executive added that a return from July 15 of non-tourism exit visas from Guangdong to Macau – including for business travel – which had been retrospectively reported on Thursday, would be “helpful to our business”.
Nonetheless, such travellers will still need to provide a timely test certificate showing freedom from Covid-19 infection.
Mr Wang’s boss, MGM Resorts’ chairman Bill Hornbuckle, said on the group’s earnings call that recent moves – including the easing of quarantine conditions for travel from Macau to Guangdong – were “initial steps in an encouraging direction”.
But he noted: “Hong Kong borders remain shut and the IVS and tour visa programmes have not yet restarted, which we believe is necessary for a meaningful recovery.”
The resumption of the IVS scheme has been widely touted as a key element in a rebound in Macau casino gross gaming revenue, which was down 77.4 percent year-on-year to June 30, according to Macau government data.
IVS travellers accounted for 46.8 percent of the aggregate mainland visitor arrivals to Macau in 2019, “and possibly a higher proportion of gaming revenues” at the city’s casinos for that period, wrote JP Morgan Securities (Asia Pacific) Ltd in a January memo at the time the IVS programme was suspended.
Jan 26, 2021Macau casino-sector earnings before interest, taxation, depreciation and amortisation (EBITDA) could return to 2019 levels “as soon as” the fourth quarter of this year, “partly helped by...
"The travel impediments [in mainland China] will lead to reduced visitation into Macau for the next few weeks at least, with Chinese New Year visitation being impacted"
Vitaly Umansky, Tianjiao Yu and Kelsey Zhu
Analysts at Sanford C. Bernstein Ltd