The accessibility of Macau to visitors from mainland China has “probably returned to 60%+ of pre-COVID-19 levels” following a significant easing of restrictions on Thursday, with only group tours and Hong Kong’s borders yet to open according to a note by investment bank JP Morgan.
As reported by Inside Asian Gaming, the Macau government has confirmed a series of changes to the SAR’s isolation and COVID-19 testing rules, among them the removal of ongoing testing requirements for mainlanders after they enter Macau. Previously up to six tests were required at regular intervals in the days following entry.
Noting that Macau’s “visa bottleneck” has also been “greatly alleviated” since the resumption of eVisas in November – even though no real benefit as yet been seen due to China’s COVID outbreaks – JP Morgan analyst DS Kim said Macau is now clearly on a path towards resuming more normal economic activity.
“Long-haul travel sentiment could remain weak for now, and there is a risk of a significant COVID-19 wave if some level of herd immunity were to be achieved in China/ Macau … but we believe the direction of re-opening is very clear, and we are sanguine about a meaningful demand recovery into/after the Lunar New Year holidays next month (21-27 January 2023),” he wrote.
“We continue to model a mass/non-gaming revenue recovery to 35-40% levels by 1Q23E, which should be enough for the [gaming] sector to start printing positive EBITDA.”
Kim added that any risk to JP Morgan’s EBITDA estimates for Macau gaming operators heading into 2023 now appeared to be on the upside, assuming Macau enjoys a a similar level of pent-up demand or “revenge gambling” as observed in other markets globally.
“In other words, we see decent headroom in both earnings expectations and valuations, and hence in share prices,” he said.
