Macau VIP GGR to recover only in 2023, analysts say

According to a report by brokerage Sanford Bernstein, VIP gross gaming revenue will not show a recovery until 2023.

Macau.- Analysts at Sanford C. Bernstein have released a report forecasting that VIP gross gaming revenue (GGR) will not recover from the impact of the pandemic crisis until 2023.

The report considered that only in 2023 will there be “more visibility around junket liquidity and demand”.

It added: “VIP in 2021 – and to a lesser extent some premium mass – could be negatively impacted by continued tighter capital controls and customer and agent concerns about dealing with junkets.”

Macau’s VIP baccarat GGR in the third quarter this year was MOP2.34bn (US$293m) of Macau’s nearly MOP4.89bn casino GGR for the period, representing a fall of 92.5 per cent in year-on-year terms.

However, VIP baccarat GGR had a market share of 47.9 per cent for the third quarter of 2020.

Mass-market baccarat generated nearly MOP1.88bn in the three months to September 30, a market share of 38.40 per cent.

The brokerage said: “Near-term, we forecast GGR in 2020 to decline 78 per cent (-64 per cent in fourth-quarter 2020). Five of the six operators have already achieved EBITDA break-even in October/November, and by the end of the year, we expect all six, including SJM [Holdings Ltd], to do so.”

The report, signed by analysts Vitaly Umansky, Tianjiao Yu, Kelsey Zhu and Xiaonan Zhang, added: “Current investor sentiment on Macau is best described as uncertain, with long-term investors looking at the structural story beyond 2020 and shorter-term investors focused on the travel and near-term revenue recovery catalysts positioning for a momentum-driven stock price upswing.”