Mainland China resumed the issuance of eVisas to Macau from 1 November, but three weeks in there is no sign of any increase in visitor numbers as the mainland battles rising cases of COVID-19, according to investment bank Morgan Stanley.
In a Monday note, analysts Praveen Choudhary and Gareth Leung noted that near-term recovery could remain muted due to the current COVID spikes in Guangdong and elsewhere in China, effectively negating the resumption of eVisas.
“According to the Baidu Search Volume index, which tracks the incidence of keywords on Baidu search engines by Chinese Internet users (both Mobile and PCs), search volumes for keyword ‘Macau IVS’ did not increase even after e-visa channels reopened,” they wrote.
“The search volume for Guangdong users even plummeted, likely due to the high number of new COVID cases in the province (>400 new cases per day, 40% of the national total).”
While Morgan Stanley suggests IVS travelers, who comprised 50% of pre-COVID visitation from the mainland, could return in some numbers from 2Q23 as China’s COVID conditions improve, the bank has revised down its estimates for 2022, 2023 and 2024 by 15%, 3% and 13% respectively.
Gross gaming revenue is now tipped to reach just US$5.6 billion this year at 15% of 2019 levels, rising to US$16 billion in 2023 at 43% of 2019 levels and US$26 billion in 2024 at 70% of 2019 levels. EBITDA in 2023 is estimated at US$3.5 billion or 37% of 2019 levels.
The analysts have also introduced their estimate for 2025, when they expect GGR to reach almost US$29 billion, comprising US$23.5 billion in revenue from mass gaming at 116% of 2019 levels and US$2.6 billion in slot revenue at 115%, but just US$2.9 billion from VIP gaming at 20% of 2019 levels.
Morgan Stanley’s revised future estimates follow a challenging September quarter for Macau’s operators, which saw them fall to a combined EBITDA loss of almost US$600 million with industry debt climbing to US$23.3 billion – up from US$4.8 billion at end-2019.
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