Reason for optimism in Macau
Casinos might break even for Q1 2020.
Some of Macau’s casinos could break even for earnings before interest, taxation, depreciation and amortization according to a report released on 1 April.
The report announced the city’s gross gaming revenue (GGR) to be MOP30.49bn ($3.84bn) despite the COVID-19 pandemic but it is down 60% compared to year-to-year statistics.
Morgan Stanley stated that, to break even, Macau casinos should aim for MOP330 million in GGR per day. However, some of the region’s operators can also rely on additional funds to elevate their situation. Sands China and Galaxy Entertainment Group receive rental income from their shopping malls, so it’s likely they’ll be less affected than others.
While it’s predicted Macau’s gaming industry won’t be back to its 2019 levels until 2022, research analysts predict Macau will be the first region to start recovering after quarantine.
With the possibility of renewed travel between Macau and China starting from May, GGR could begin growing from June. This means that by 2021, Macau could see 60% of 2019’s profits, which can grow to 90% by 2022.
Travel restrictions due to the pandemic have crippled Macau’s revenue. The local Government has expressed hope for the future, but researchers remain skeptical: “Last week, Macau’s Finance Secretary [Lei Wai Nong] commented that the Government envisioned ‘normalcy’ at its borders soon, which we think may be right in 6 to 12 months, but it is too optimistic for 2020.”
Independent equity trading arm Instinet predicted that, should the travel restrictions be lifted, Q2 would see an 80% GGR decline, which would turn into 65% for Q3 and lessen to 60% in Q4.
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