Bernstein: VIP GGR may return by 2023

VIP gross gaming revenue (GGR) in Macau may recover before 2023 when there is “more visibility around junket liquidity and demand,” according to a recent report published by Sanford C. Bernstein Ltd.
In the coming year, the GGR of the VIP sector “could be negatively impacted by continued tighter capital controls and customer and agent concerns about dealing with junkets,” according to the note seen by GGRAsia.
The GGR from VIP baccarat collected MOP2.34 billion in the third quarter (Q3) of 2020, diving 92.5%, year-on-year, from MOP31.1 billion raked in during the same period last year, according to the Gaming Inspection and Coordination Bureau (DICJ). The plunge was led by the Covid-19 pandemic-related economic contraction.
Despite the yearly decline, the VIP baccarat in Q3 advanced almost 56% from just MOP1.5 billion in the second quarter this year, mainly attributed to the reinstatement of the Individual Visit Scheme (IVS) permits for all mainland tourists since September 23.
The inflow of mainland tourists into Macau, brought about by the implementation of the scheme, has offered a great flip for the city’s casino industry.
In the past two months, five of the six operators had already broken even in earnings before interest, taxation, depreciation and amortization (EBITDA), said Sanford, who is expecting all six of them, including SJM, to recover the expenses later.
In the short term, Sandford predicts that Macau’s GGR in 2020 will fall by 78%, with a drop of 64% expected in the fourth quarter of 2020.
Looking forward to the longer term, the GGR may rise by a compound annual growth rate (CAGR) of 2% judged over the period of “2019 to 2023,” the research company said.
“The uptick is projected to be driven by 6% CAGR in mass, especially the premium mass, meanwhile, offset by a decline of 4% CAGR in VIP,” said the analysts of Sanford.
However, the research also pointed out that not all tourists to Macau are gamblers, meaning there will be more elements factored in, apart from visitor arrivals, for the actual casino market performance.