Gross gaming revenue in the Macau SAR is likely to fall by more than 95% year-on-year in February given the 15-day closure of all casinos and the strong possibility the shut-down order will be extended through the end of the month.
The prediction was offered by brokerage Bernstein in a Monday note which estimated Macau’s GGR during the four days casinos were open at the start of this month at MOP$800 million to MOP$1 billion – down 75% year-on-year and 68% sequentially.
However, with GGR of zero in the seven days since and the government still non-committal on whether casinos would be allowed to re-open after 15 days, analysts Vitaly Umansky, Eunice Lee and Kelsey Zhu believe February GGR is highly likely to finish down by more than 95% compared with the same period in 2019.
“Forecasts for the near term (i.e. 1H 2020) are largely guesses at this time, with the biggest variables being when casinos reopen, and even more importantly, when travel restrictions from China will be lifted,” they said.
“We estimate February to be down over 95%, assuming the casinos stay closed for the rest of the month.
“China has put in travel restrictions across much of the country and many businesses remain closed or reduced working hours. A growing number of countries have been implementing travel restrictions on entrants coming from China and airlines are significantly reducing or eliminating scheduled flights.
“China stopped all group travel (including to Macau) and stopped the issuance of IVS visas – the reversal of these restrictions will be key for resumption of business in Macau.”
While Bernstein noted that there were mixed views on how lethal the Coronavirus outbreak actually is – one expert last week stated the mortality rate outside of mainland China was no worse than the common cold – the analysts added that the growing number of infections and fatalities on the mainland means the economic impact on China and impact on travel will be worse than SARS.
“For Macau, the near term looks bleak,” they said, “but we see a solid recovery in place in 2H followed by a strong 2021.”