The Macau rebound continued in May, according to JP Morgan Securities (Asia Pacific) Ltd. The brokerage projected that gross gaming revenues (GGR) will top out at MOP11.10 billion (US$1.38 billion) for the first three weeks of the month, “ahead of (surprisingly) strong April figures.”
In a May 22 note to investors, analysts DS Kim and Mufan Shi wrote, “Last week’s GGR weakened to circa MOP450 million a day, but we’d again flag the potential margin of error in these weekly checks and would focus on monthly/month-to-date trends (versus just a single week).”
The month-to-date figures “suggest mass demand is run-rating at around 85 percent of pre-Covid levels, while VIP is at around 25 percent recovery, both of which are well above 67-percent/15-percent recovery rates during first-quarter 2023.”
For the full month, the duo expects GGR “to print yet another post-pandemic high of MOP15.5 billion,” suggesting a “60 percent recovery on headline GGR, led by 85 percent mass recovery.” They took into account a surge of visitation for the Labor Day holiday, which began April 29 and continued into the first week of May.
GGR for April reached MOP14.72 billion, up 15.6 percent from March and 449.9 percent year-on-year, for the best monthly result since January 2020, prior to Covid-19 shutdowns. The upward trend began with the easing of most border restrictions into the city on January 8.
According to Inside Asian Gaming, Joseph Greff of J.P. Morgan is upbeat on Macau, writing that, though there is “plenty of room to get back to pre-pandemic levels,” there are plenty of positive markers: more hotel rooms opening up, more ferry and airline traffic, and increased visitation across the board. One Macau operator told Greff he expects to reach 2019-level cash flow from only 70 percent of 2019 visitation.
Deutsche Bank analyst Carlos Santarelli found operators less hopeful.
“Despite the strengthening” of visitation, he wrote, “management teams remain of the view that friction in the transportation system continues to serve as a considerable impediment. Airline capacity, ferry capacity, bus capacity from [Hong Kong], and airline-ticket prices, due in part to the limited capacity, were all noted as transportation-related bottlenecks in the system, which, while improving, remain a headwind to achieving 2019 visitor-volume levels.”
