Gaming analysts remain largely bearish over Macau’s prospects for the upcoming Chinese New Year Holiday, despite the SAR’s casino operators exceeding expectations when GGR figures for January were published Monday.
As reported by Inside Asian Gaming, gross gaming revenues for the first month of the year showed slight improvement over December, rising 2.6% sequentially to MOP$8.02 billion – the highest monthly GGR figure in a full year. The 63.7% year-on-year decline exceeded Bloomberg estimates of a 67% fall.
But the mood is cautious at best for Chinese New Year and beyond, with restricted travel due to recent COVID-19 outbreaks in mainland China, coupled with Beijing’s crackdown on cross-border gambling and money flow, leading analysts to predict a subdued few months ahead.
“The worst is likely over but we still need more visibility,” said Union Gaming’s John DeCree in a Monday note. “While it seems that the worst is behind us for now, we are maintaining our more neutral outlook on Macau overall until we have more visibility on the pace and magnitude of the recovery and concession renewals.
“With a number of isolated COVID cases throughout China and the region we expect travel will remain moderate over the coming months, including during the Chinese New Year (CNY) period.”
Credit Suisse analysts Kenneth Fong, Lok Kan Chan and Rebecca Law reiterated concerns that VIP and premium mass players have been canceling their CNY trips due to difficulties obtaining visas to travel.
“A top Macau junket we have talked to expects that VIP volume for the peak CNY period could be 20% less than the last October Golden Week holiday,” they stated.
“Looking ahead, February GGR could be disappointing as the China government has been discouraging cross-province and cross-city travels to prevent the outbreak spreads. Even if we were to assume a daily GGR of MOP$280 million (at the run rate of the October Golden Week) for the peak CNY period and MOP$260 million (at the run rate of January despite the tightening pandemic controls) for the rest of the month, February GGR will only be marginally higher than January at around MOP$265 million.”
Bernstein analysts noted that, “Travel impediments will lead certainly to reduced visitation (vs earlier forecasts) into Macau for the next few weeks at least, with Chinese New Year visitation being impacted.”
On a positive note, DeCree is of the belief that China’s war on cross-border gambling will eventually work to Macau’s benefit, even if such benefit won’t be seen in the short-term.
“China’s latest crackdown on offshore gambling makes us less certain about a potential recovery for the higher end customer segments, namely junket VIP,” he said. “In the long run, we expect the offshore gambling crackdown could accrue to Macau’s benefit; but for now, the ambiguity of the new law will likely continue to deter some VIP customers and limit junket operations in Macau. “
“We wouldn’t expect any clarifying comments from China on whether this law excludes Macau, but over time we expect the SAR will be treated more favorably, potentially allowing for some more VIP to return to the market.”
Analysts are tipping February GGR to decline by between 65% and 69% compared with February 2019 although they will almost certainly show year-on-year improvement versus February 2020, when Macau’s casinos closed their doors for 15 days to curb the spread of COVID-19.
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