Gaming | Analysts review forecasts for city’s 2020 growth outlook

Gaming analysts expect little improvement in the way of Macau gross gaming revenue this month, with one brokerage forecasting that revenue may plunge 70%.

Last month, the city suffered from a drop in gaming revenue due to Covid-19, recording only 3.1 billion Macau patacas in revenue, an 87.8% plunge compared to a year earlier and the lowest monthly revenue since 2004. The forced closure of all casinos in the city for 15 days was a major factor in the drop in revenue.

In February, the daily run-rate was MOP107 million, implying above MOP220 million per day during the 14 days of operation for the month.

As JP Morgan Securities (Asia Pacific) Ltd expects that the city’s gross gaming revenue will continue to dive this month, it forecast that there would be a 24% decrease in this year’s overall gaming revenue, as well as a 35% decline in the second quarter, before the decline is forecast to narrow to 8% in the following three months. A 5% drop in the final quarter is also expected.

Meanwhile, CitiGroup has decided to lower the forecast for 2020 gross gaming revenue growth from -12% year-on-year to -28% year-on-year.

The group forecasted that Macau would likely see an 11% year-on-year decline in gross gaming revenue in the third quarter of 2020.

The lack of clarity over next month’s peformance is based on several factors, including the halt in the issuing of Individual Visit Scheme permits for mainland residents to travel to Hong Kong or Macau.

This has severed the supply of tourists and gamblers from the mainland to Macau, which derives a large portion of its income from the gambling sector.

Despite the reopening of casinos on February 20, there are restrictions still in place, including the number of tables casino operators can have and the number of seats at each table.

Macau casinos struggled to adjust to a perfect storm of economic headwinds last year, including the fallout from the China-U.S. trade war, relentless protests in neighboring Hong Kong and a crackdown on online gambling in both Macau and the mainland.

Gaming executives are also concerned about the impact of the coronavirus on this year’s economic slowdown.

Galaxy Entertainment Group’s deputy chairman Francis Lui previously said that the impact of the virus “won’t be small.” He said he expects construction of the company’s new casinos in Macau will be slowed by the outbreak.

The chairman and CEO of Melco Resorts and Entertainment, Lawrence Ho, has also remarked that economic progress will be slow and that it will still take some time for the gaming operator to regain the momentum it previously had.