Brokerage Morgan Stanley has lowered its forecast for Macau’s gross gaming revenues (GGR) for this year and 2023 by 15 per cent and 3 per cent respectively, saying that “rising Covid cases are not helping the important resumption of e-visas since November 1”.
Analysts Praveen Choudhary and Gareth Leung explained in a note that a near-term recovery for the gaming industry will remain “muted” due to a spike in Covid-19 infections in Guangdong and elsewhere in mainland China.
The number of Covid-19 cases has been surging in mainland China recently, with over 400 new cases a day recorded in neighbouring Guangdong province, accounting for 40 per cent of the national total.
Due to the unstable pandemic situation and a dynamic zero-covid policy still in place, the analysts expect the short-term recovery will stay muted, despite the resumption of e-visas earlier this month and a reduction in quarantine days required for foreign arrivals.
The analysts noted that the search volume for the keyword ‘Macau Individual Visit Scheme (IVS)’ had yet to pick up since e-visa channels reopened, while searches by Guangdong users even plummeted, likely due to the high number of cases recently reported in the neighbouring province.
Morgan Stanley thus revised down its 2022, 2023 and 2024 GGR estimates by 15 per cent, 3 per cent and 13 per cent respectively, to US$5.6 billion, US$16 billion and US$26 billion.
The investment bank also revised down by 7 per cent and 38 per cent respectively its estimates for net revenue and earnings before interest, taxation, depreciation and amortisation (EBITDA) for Macau gaming companies in 2022.
Saying that it is not until 2023 travel normalization will occur, the brokerage expects individual travelers to return to the city when the Covid-19 situation in mainland China improves sometime in the second quarter of next year.
