Gaming results hit rock bottom in April – Morgan Stanley

Analysts at Morgan Stanley believe that local gross gaming revenues reached their ‘bottom’ in April when only MOP754 million (US$94.4 million) were reported, with results to continue improving in the next quarters.

April results represented the worst monthly performance since the liberalisation of the gaming industry, with that month seeing the Guangdong Province imposing a 14-day quarantine on anyone crossing the border, the suspension of Hong Kong-Zhuhai-Macau Bridge buses, and the demand of negative nucleic acid tests for travellers intending to board a flight to the city.

Afterwards, gaming revenues bounced back to MOP1.2 billion in May, with the first five months have reported a 76.7 per cent year-on-year fall to MOP33 billion.

The brokerage has reduced its gaming revenue estimates from a 38 per cent year-on-year fall to a 55 drop due to delay in border openings, with 2021 to see a 90 per cent year-on-year rise.

Morgan Stanley also expected the VIP market to grow faster than mass ‘as is visible so far in 2020’ due to ample liquidity and overseas VIP business that could potentially come to Macau.

The financial company also expected gaming operators will larger mass market exposure, such as Sands China, to see a drop in market share.

‘While the industry could see 19 per cent lower mass revenue in 2021 (vs.2019), Sands China could see that down 24 per cent due to its highest exposure to grind mass,’ Morgan Stanley added.

Still, the brokerage pointed as concerns that could impact the local gaming market recovery, social distancing measures that could limit mass revenue to reach the earlier peak in 2019 and continued US-China trade tensions that could mean weak macroeconomic factors.