Monday’s announcement by the National Immigration Administration (NIA) that electronic applications for individual and group travel visas to Macau would reopen from Tuesday is a “great boon” for Macau’s return to normalcy and could help operators print positive EBITDA by December, according to JP Morgan.
In a note, research analyst DS Kim observed that the NIA’s announcement suggests eVisas will resume for 49 eligible cities from tomorrow, rather than the phased roll-out originally predicted. He also said the process appears to be the same as pre-COVID days – near-instantaneous with on-site approval from a walk-in and no need for pre-registration, visa interviews or seven-plus days of waiting.
“This will be a great boon for Macau’s return to normalcy,” Kim said. “In a nutshell, we think the resumption greatly alleviates the frictions for a Macau trip (no need to pre-book application slot, no need to get interviewed, no need to wait 7+ days to get visa approved) and could signal to many that ‘it’s OK’ to come to Macau now.”
Taking into account the prevailing COVID situation in mainland China, with the latest outbreak suppressing travel sentiment, Kim said he does not expect Macau GGR to suddenly snap-back on the eVisa resumption.
“However, we do believe this is a significant step toward Macau’s normalization and are sanguine on gradual yet meaningful recovery from December, possibly to the level allowing the industry to print positive EBITDA,” he added, noting this requires GGR reaching around 35% of pre-COVID levels.
Also on the horizon for Macau is a final decision by the government’s tender committee on which companies will be awarded a new 10-year gaming concession following the recent re-tender.
With an announcement expected within weeks, JP Morgan maintains that the current six concessionaires will prove successful, although it is possible that one or more could agree some sort of partnership with either the seventh bidder, Genting Malaysia, or local satellite casino owners via joint ventures or equity investments.
Kim’s base case factors in a “reasonable” investment commitment of around HK$10 billion to HK$20 billion for the successful bidders over the 10-year period and few other major changes.
“These outcomes, if they materialize, will be seen as ‘much better than feared’ and thus could/should catalyze the stocks to rebound meaningfully from here, in our view,” he said.
