Gross gaming revenues in Macau reached a new record since the beginning of the pandemic. In the first four months of the year, more has already been done than in 2022 and more than half the numbers for 2021. Analysts believe that the revenues provided for in the 2023 Budget will even be exceeded. Going back to 2019 gross revenues seems like an impossibility
Gross gaming revenues in the month of April reached 14.7 billion patacas, a positive variation of 449.9 percent compared to the same period last year (approximately 2.7 billion). This means that April is then the post-pandemic month with the best results for the industry, according to data revealed by the Directorate of Inspection and Coordination of Games (DICJ).
Although far from the results obtained in April 2019 (23.6 billion), or even the first four months of that same year (99.7 billion), the reality is that these 49.4 billion revenues collected in the first months of 2023 already exceed the total raised in 2022 (42.2 billion patacas).
On the other hand, they already represent more than half (56 percent) of the total achieved in 2021, the year in which Macau made around 86.8 billion patacas in stakes, and 81.8 percent of the results obtained in 2020 (60.4 billion ).
Conservative budget
Analysts are optimistic about this growth, noting that the Macao SAR Budget of 130 billion patacas from gross gaming revenues, which has failed three consecutive times, may now be exceeded. The revenue raised so far, by the way, is equivalent to almost 38 percent of the Government’s objectives. “If gross gaming revenues over the next eight months were exactly the same as the first four, then we would end the year at 150 billion. If we consider that there will be an increasing number of visits to Macau by the end of the year, gaming revenue could be even higher”, predicts Zeng Zhonglu, professor at the Pedagogical and Scientific Center for Gaming and Tourism at the Polytechnic University of Macau (UPM).
Despite the expectation, he does not fail to point out that “the recovery of the continental market is slower than expected”.
JP Morgan Securites (Asia Pacific) Ltd. also stated this Monday that the performance of the industry should “reassure investors for a very clear increase in demand” in the rest of the second quarter.
The broker noted that this year the Labor Day Golden Week (May 1) holiday period lasted five days – between April 29 and May 3 inclusive – whereas in 2019, pre-pandemic, it only had four days. . “Regardless of the comparison difficulties, we are confident of a ‘strong recovery’, where mass market demand recovers comfortably to more than 80 percent of pre-Covid levels”, defended JP Morgan analysts DS Kim and Mufan Shi.
In another note on Monday, John DeCree and Max Marsh, from CBRE Securities LLC, said that in May there will be “a new recovery” in Macau. “Gross gaming revenue in April implies an annual run rate of more than $22 billion,” they said, adding, however, that the outlook could improve further.
VIP drop does not allow full recovery
Even though it is “a significant step” towards recovery, JP Morgan analysts estimate that the VIP sector has only recovered 20 to 25 percent of pre-Covid levels. The brokerage said these results are “pretty solid for a segment that was widely regarded as ‘disappeared’.”
To our newspaper, Zeng Zhonglu says that it will not be possible to return to 2019 revenues, precisely due to the drop in the VIP segment and the fact that Beijing has tightened surveillance on the activity. “In the first three months of the year, the VIP segment reached just 25 percent of gross revenues, while in 2019 it reached 49 percent. The recovery of the mass market is being faster and we are witnessing a new era since China strengthened measures against cross-border gambling”, he explains, adding: “Until now, visas for visitors from the Mainland continue to be blocked, therefore, we are seeing a slower recovery of the mainland market. Furthermore, Covid-19 remains a threat.”
George Choi and Ryan Cheung, from Citigroup, said in a note on Sunday that a study of Macau tables carried out by the institution on April 28, shortly before the Labor Day festivities, indicated that the average minimum bets in baccarat had increased 8 percent from March. The total value of bets was HK$7.2 million, “25 percent more than the previous month”.
Moody’s, a financial rating agency, warns of another problem. The consumption capacity of people for leisure, including casinos, is “decreasing” due to an economic environment characterized by high inflation and rising interest rates.
