With GGR up 325 per cent for the year so far, the Macau gaming sector is now facing a new threat to its return to growth being hampered by a rise in influenza cases as reported by the China National Influenza Center.
The sector is currently running at about 61 per cent of the pre-pandemic year, Jefferies analyst David Katz has warned economic growth in China could be hampered by an increase in respiratory illness in Northern China.
Mr Katz said: “Based on the China National Influenza Center, the number of influenza-like infections increased from only six cases for week of September 10 to 401 for week of 26 November.”
“We expect valuations to remain pressured until headwinds and concerns ease. We believe these levels are risk-adjusting for the concerns over the China macro and revenue inconsistency which should be expected as the market and its operators find the new post-VIP normal mix and margin level under new concession agreements,” he warned.
Macau’s casinos generated GGR of US$1.99bn in November, an increase of 435 per cent year-on-year.