Casino sector on the brink of revenue downturn
The city’s gaming sector is expected to tumble this month as analysts forecast a 13% drop in gross gaming revenue (GGR) compared to March, which was MOP3.67 billion – a 55.8% tumble compared to figures recorded in February.
According to brokerage Sanford C. Bernstein, border restrictions and Covid-19 cases in the mainland are factors leading to the negative forecast.
Just this week in Guangzhou, the neighboring region’s manufacturing hub closed as China battles a major Covid-19 surge in its large eastern cities. Shanghai has also taken the brunt of the rise, with another 26,087 cases announced on Monday, as the city sees its 26 million under a tight lockdown.
No such lockdown has yet been announced for Guangzhou, a metropolis of 18 million, which recorded 27 cases on Monday.
Macau authorities have remained adamant in their strict border measures for Guangdong, requiring a 24-hour negative Covid-19 test result for travelers from the neighbouring Guangdong province.
In Bernstein’s channel checks, analysts forecast Macau’s GGR from April 1 to 10 to be around MOP1 billion, an average daily rate of 100 million.
This figure is down 86% compared to pre-pandemic levels, and 64% compared to last year’s earnings.
In a note, analyst Vitaly Umansky said that the figure in April could drop if “further tightening occurs.”
As cited in a report issued by GGRAsia, the analyst remarked, “April’s GGR – and potentially May – is likely to continue a recent trend of weakness,” stressing that “Shanghai and Changchun – with approximately 35 million in population – are still in full or partial lockdown as of today, and other areas have partial lockdowns.”
Morgan Stanley, meanwhile, has estimated that the three of the six gaming operators are likely to post negative EBITDA during the first quarter of this year.
The operators are MGM China, SJM Holdings and Wynn Macau.
As previously reported by the Times, the anticipated revival of the gaming sector is again receding into the distance, with no recovery expected for at least six months. Gaming insiders have admitted that the casino sector’s financial situation is set to worsen in the next six months, expressing concerns about possible additional financial pressure coming from the closure of several satellite casinos.
Just recently, Fitch Ratings forecast that Macau’s economy would only expand by 19% in 2022, based on the assumption that gaming revenue will recover to about 44% of its pre-pandemic levels, far lower than the initial expectation of 36%.
The credit rating agency expects that gaming tourism recovery will pick up momentum in the second half of this year, underpinned by a gradual resumption of inbound tourism from mainland China.
