DEUTSCHE BANK ANALYST REPORT POINTS OUT THAT THE REOPENING OF THE RAEM’S BORDERS THIS MONTH HELPED THE GAMING SECTOR TO TRIPLE THE WEEKLY AVERAGE RESULTS. HOWEVER, PLEASE BE ADVISED THAT GAMING RESULTS DURING THE CHINESE NEW YEAR PERIOD ARE GENERALLY LOWER
The gross earnings per week of the gaming sector in the Macao SAR almost tripled in a few weeks with the lifting of movement restrictions, reads in the report by Deutsche Bank analysts. However, the same analysts warn that industry revenues are likely to be lower during and after the Chinese New Year period. At the end of 2022, the weekly average of Macau’s gaming sector reached 114 million patacas, results that gradually increased with the removal of pandemic circulation restrictions in the region, jumping to 263 million patacas on January 9 and to 314 million patacas on January 15.
“Looking at the data for the 2013-2019 period, from a perspective of gross results per day, the period after the Chinese New Year exceeds the period of festivities by between 65 and 75 percent,” point out analysts Carlo Santarelli and Steven Pizella. “In fact, over time, when we look at this ‘soft period’ that includes the New Year, and post-New Year period, the combined average of the two aggregated periods basically mirrors the periods immediately before.”
The investment bank also produced estimates for gaming market segments through 2024, predicting that the local mass market should recover next year to around 85 percent of 2019 levels. remain aware of the unknown impact stemming from structural changes in the VIP game promoter industry and how these changes may affect the ‘premium’ mass segment,” states the report.
“That said, as noted earlier, we anticipate the VIP market to return to approximately 48 percent of 2019 levels by 2024.” more than half of the forecasted US$26 billion in gross gaming revenue for that year, with the VIP market standing at US$8.1 billion. Macau’s new gaming law – in force since January 1 this year – only allows gambling promoters, known as junkets, to provide services to a gambling operator, with most concessionaires expected to focus on the mass segment. ‘premium’ and direct management of VIP clients.
“We expect VIP sector profit margins [for dealerships] under the new structure to be higher, although it will depend primarily on the level of competition among dealerships for direct VIP customers,” notes the report. “As such, while we recognize that this may be an exaggeration, pasta sector revenue need not necessarily be above 2019 levels for total earnings before interest, tax, depreciation and amortization of integrated gaming resorts in Macao exceeds 2019 levels if VIP revenue equals or exceeds 50 percent of 2019 levels.”
