Macau’s six gaming concessionaires are already printing a profit again following the recent dumping of border restrictions, with mass gaming revenue now back to 50% of pre-COVID levels according to investment bank JP Morgan.
In his weekly GGR update, JP Morgan analyst DS Kim said gaming revenues for the first 15 days of January were estimated at MOP$4.3 billion (US$535 million) or between MOP$285 million and MOP$290 million (US$35 million to US$36 million) per day – suggesting GGR over the past seven days had improved to MOP$310 million (US$38.5 million) per day as visitation increases.
“What does this print tell us? Stripping out largely lifeless VIP segments, the print implies mass/slot GGR run-rate has recovered to over 50% of pre-Covid levels, hitting well over EBITDA break-even levels (mid-30%s recovery in mass) and reaching an important milestone of FCF (free cash flow) breakdown (mid- 50%s of recovery in mass) for the industry,” Kim said.
“The print implies a 35-40% recovery on total/headline GGR vs pre-Covid; but we highlight again that benchmarking to “total/headline GGR” doesn’t work anymore given the demise of junkets/VIPs [so] we’d only benchmark mass recovery pace.”
Kim also noted that the current trend suggested the upcoming Lunar New Year holiday period is now tracking well above its previously modelled 35% to 40% recovery for mass, suggesting “clear upside risk to near-term numbers.”
“We wouldn’t be surprised to see mass demand recovering above 60% of 2019 [Chinese New Year] at this rate, which, if it happens, should comfortably meet – if not beat – recently elevated sell-side and buy-side expectations, in our view.”
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