Gaming | Mass GGR is ‘comfortably recovering’ whilst VIP fared ‘bad’: JP Morgan

The mass-market demand has been on a path to steady recovery, with its gross gaming revenue (GGR) forecasts set to advance 25% quarter-to-quarter, reaching 48% of pre-Covid-19 levels in the second quarter of 2021, the international investment banking group JP Morgan stated in its prognosis released yesterday.
The growth in the mass market, with its GGR reaching 39% of pre-Covid-19 levels in 2019, was the key driver for an 8% quarter-over-quarter uptick in the overall GGR in the first quarter of 2021, totaling close to MOP24 billion or MOP263 million per day.
By comparison, “VIP was unsurprisingly weak at 19% of pre-Covid-19,” analysts of JP Morgan DS Kim, Derek Choi and Livy Lyu said.
The mass GGR has been “comfortably recovering,” the brokerage emphasized. In March, the mass demand reached more than 40% of pre-Covid-19 levels in 2019. This suggested that the premium mass “has already recovered to over 50% of pre-Covid-19,” the analysts said.
The brokerage projects greater momentum in rebounding into the second quarter and beyond, driven by several favorable factors such as a rapid revival of China’s outbound tourism market during the Ching Ming festival, and a “stabilizing Covid-19 situation in Hong Kong.”
“All-in, we comfortably model mass GGR to rise 25% quarter-to-quarter in the second quarter to 48% of pre-Covid-19, and further to 65% to 85% in Q3/Q4 as travel restrictions are likely lifted into the second half” JP Morgan projected.
Concerning the VIP sector, the analysts regard it as “bad” since it only stood at 19% of pre-Covid-19 in the first quarter, showing little sign of improvement despite the opening of quarantine-free travel with China last year.
The sluggish performance of VIP GGR was attributed to supply-side issues, “with a series of reform and clampdowns having crippled junkets’ ability to engage with players and provide liquidity,” the brokerage explained.
JP Morgan projected that VIP GGR can ultimately recover to only “about half of pre-Covid-19 levels.”
The brokerage is anticipating a sharp increase in GGR during the Golden Week in May. It also forecasts a possible “extension of gaming concession in June by at least a year”, and possible relaxed travel restrictions around the summer holidays, such as the opening of the China-Hong Kong-Macau travel bubble.

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