Analysts at Instinet, owned by Nomura, believe Macau faces a three-year recovery to get back to where it was before the coronavirus outbreak with June 2020 GGR reset giving way to a gradual ramp up by mid-2023.
It believes that the international recovery will ‘occur first in Macau’ but border restrictions between Macau and neighbouring Guangdong introduced in March were a ‘setback’ for casino revenue ‘which was gaining traction in March.’
Instinet analysts Harry Curtis, Daniel Adam and Brian Dobson said: “There will likely be a recovery in 2020, but slow. Beijing is taking the risk of a second wave of infection seriously. When the IVS system is restarted, it will be into a safe and controlled environment. VIP and premium mass are probably the first to recover since there are likely to be restrictions on visitation growth which will limit mass.”
It is predicting a fall in revenues of 65 per cent in Q3 and 60 per cent in Q4 adding that ‘if the reinfection rate is low’ Macau’s could reach ‘US$22.6bn in GGR in 2021, roughly 62 per cent of the 2019 level.’
“To achieve this number, IVS needs to expand to larger, more distant provinces, mass and group visitors must have confidence in health screening protocols at the borders, and social distancing policies on casino floors should be relaxed, thus increasing the number of operational gaming positions during peak periods,” the analysts added. “An effective vaccine would likely be needed to exceed our 62 per cent (of 2019 GGR) estimate.”
It believes the IVS system will restart in May, firstly in mainland China provinces ‘where demand will not overwhelm immigration checkpoints.’
“Larger provinces, like Guangdong and Hubei, may get segmented into northern and southern sections with visas first issued in the closest virus-free areas,” it added. By 2022, it added: “We estimate that GGR recovers to roughly 90 per cent of 2019 highs, if borders, IVS and casino operations have returned close to normal.”