Macau’s casino industry will need at least three months for business to return to normal operations once the current coronavirus outbreak is controlled. That is according to the Macau Gaming Equipment Manufacturers’ Association, a body also known as MGEMA.
“After the outbreak is under control and visa restrictions [to Macau] are removed, it will most likely take at least three months for the gaming industry to get back on track again,” the trade group said in a special e-newsletter focused on the coronavirus outbreak and the first three days of Macau’s casino closure.
In an effort to prevent the spread locally of the mainland-China originating novel coronavirus infection, the Macau government announced last week that the city’s casinos would be closing for at least 15 days, starting from February 5. Commentary from several brokerages has suggested that Macau’s casino gross gaming revenue might fall by about 50 percent year-on-year in the first quarter this year.
Authorities in mainland China also have stopped issuing – until further notice – individual travel visas for visits to Macau by mainland residents. Tour groups from the mainland to Macau are also suspended. The authorities have said the measures are part of the efforts to cut travel across China and so reduce the risk of further spread of the coronavirus.
There were 10 confirmed cases of coronavirus in Macau as of Sunday, including three involving locals. China’s National Health Commission said on Monday there were 40,171 confirmed cases within the country as a whole by Sunday, and that the national death toll stood at 908.
Suppliers also impacted
The MGEMA stated in its latest comments that the electronic gaming manufacturing industry was being negatively impacted by the Macau casino closure.
“All the ongoing business will slow down because of the casino closure, such as machine installations,” the trade body said. It added it also expected budget allocated by casino operators for procurement of new electronic gaming machines to “shrink” in the near term.
The MGEMA has more than 120 members, namely technology and equipment companies supplying Macau’s gaming industry, according to the association’s official website. The body is the organiser of the Macau-produced casino industry trade exhibition and conference known as the MGS Entertainment Show.
Casino operator Wynn Resorts Ltd chief executive Matt Maddox said last week that the casino closure step in Macau was costing the company between US$2.4 million to US$2.6 million a day. Wynn Resorts is the parent company of Macau casino operator Wynn Macau Ltd.
Sanford C. Bernstein and Co LLC said in a note last week that demand for Macau casino gambling could make a strong recovery in the second half of the year, provided China’s coronavirus outbreak can be controlled soon.
Credit research firm Fitch Ratings Inc said in Thursday commentary that while the casino closures were going to have “meaningful, immediate impact to cash flows for the Macau casino operators,” the impact to revenue and cash flow in the long term should be “temporary”.
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Analyst at Roth Capital Partners