The resumption of travel to Macau could return the local gaming industry to positive earnings by the end of the year, says JP Morgan research analyst DS Kim.
On November 1, Macau’s National Immigration Administration (NIA) resumed electronic applications for individual and group travel visas to the Chinese special administrative region (SAR).
In an announcement, the NIA stated, “Mainland residents can apply for group travel and individual travel visas using the smart visa facility at the entry-exit administration department of their household registration or usual place of residence, without the need to submit paper applications.
“Persons from areas with medium- to high-risk of epidemic and those with a history of residence in medium to high-risk areas are not allowed to use the smart visa facility.”
According to GGRAsia, it’s the first time since the start of the Covid-19 that applications for group tours will be allowed. Individual visa applications were suspended in March 2020.
In September, Macau Chief Executive Ho Iat Seng disclosed that he had applied to the central government for the resumption of group tours and eVisas to Macau, limited to “four provinces and one city” including Guangdong Province, Zhejiang Province, Jiangsu Province, Fujian Province and Shanghai.
But in good news for the SAR, entry will be open nationwide, other than for those in areas of greater risk. In a note, Kim said eVisas will be available to people from 49 cities, with no need for preregistration, visa interviews or waiting periods of a week or longer.
“This will be a great boon for Macau’s return to normalcy,” he wrote. “In a nutshell, we think the resumption greatly alleviates the frictions for a Macau trip (no need to pre-book application slot, no need to get interviewed, no need to wait seven-plus days to get visa approved).”
Though recent Covid outbreaks may keep some people at home, Kim added, “We do believe this is a significant step toward Macau’s normalization and are sanguine on gradual yet meaningful recovery from December, possibly to the level allowing the industry to print positive EBITDA” (earnings before interest, taxes, depreciation and amortization).
Kim said that outcome would require gross gaming revenues (GGR) at about 35 percent of pre-Covid levels.
In a note, Credit Suisse analyst Kenneth Fong said he expects the reopening to offer some “share price support” to Macau concessionaires, whose share prices have been decimated throughout the pandemic—this despite a current outbreak in Guangdong Province, and new cases in Macau itself.
Meanwhile, Macau’s gaming license retender is winding to an end, with an announcement of the new concessionaires expected soon. Per JP Morgan, as reported by Inside Asian Gaming, the current Big 6 concessionaires will maintain their licenses, though one or more could forge some kind of partnership with the seventh bidder, Genting Malaysia, or local satellite casino owners.
The Macau Daily Times reports that the general unemployment rate dropped slightly to 4 percent between July and September period, while the unemployment rate of local residents was 5.2 percent, also dropping slightly by 0.3 percentage points.
However, the publication notes, those figures “are still considered high as the city continues to suffer from economic fallout caused by the pandemic, with the government adhering to strict Covid-19 restrictions.”
