Visitation to Macau has climbed exponentially to new three-year highs over the first three days of the Chinese New Year “Golden Week”, but it is the next three that will determine how profitable the holiday period has been according to investment bank JP Morgan.
In a Wednesday note, JP Morgan analyst DS Kim described the average 61,166 people to have entered Macau over the first four days of Golden Week as “decent but not amazing” due to a higher mix of Hong Kong arrivals – 38% versus the usual 25% – who are more often day trippers with smaller wallets.
However, he also noted that the vast majority of CNY gaming volume traditionally occurs on days occurs in the latter half of thew week, adding, “Our checks indicate a 50%+ recovery in mass GGR (v 2019 CNY) is certainly doable.”
While JP Morgan has modelled January GGR of around MOP$200 million (US$25 million) per day, representing recovery to 25% of total 2019 GGR and 40% of mass, it also noted that the pace of recovery has comfortably exceeded estimates. As such, buy-side expectations are likely closer to MOP$300 million (US$37 million) per day, representing 35% of total and 50% of mass revenues in 2019.
Such levels would just about drive industry free cash flow to break even
“We believe this is still achievable despite the weakish mainland visitation for Chinse New Year,” Kim wrote. “We’ll find out soon enough.”
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