JP Morgan, a famous investment bank, has altered its estimated earnings for the first quarter of 2023 for Macau gaming operators. These alterations are a consequence of last week’s news: most of the border restrictions between Macau, Hong Kong, and mainland China will be terminated from January 8th.
This means ferry services between Hong Kong and Macau will be resumed, which will help the economy of both markets.
Passing without restrictions:
Inside Asian Gaming reported that all of the visitors from the mainland, Hong Kong, and Taiwan will be able to pass the border without a negative COVID-19 test that had been required for a long time. They also won’t be obliged to declare their health status, and quarantine requirements for foreigners won’t be necessary.
TurboJet and Cotai Water Jet, two of the ferry operators, both continued to sail between Macau and Hong Kong on Sunday. The initial schedule that will be followed is ten round-trips sailing a day, and during the next weeks, that number will increase.
DS Kim, JP Morgan’s analyst, said that the changes were “incrementally positive.” He commented: “the path to normalcy is now ahead of what we/the market had expected.”
He also commented on the previous expectations of mass market GGR recovering, saying it would be 35% higher than in Q1 of 2019. He also said that the Chinese New Year holiday period was a bit too conservative if we keep in mind the return of Hong Kong players.
Kim expects positive EBITDA in Q1 and positive free cash flow from Q3, which will increase the GGR levels in March by more than 35%, and for the June quarter, that increase is expected to be higher than 50%.
He added: “And we wouldn’t be surprised if full recovery (mass/non-gaming GGR going back to 2019 levels) happens sometime in 2H23, much earlier than our current model of mid-2024.”
This increase is great news for Macau since this is the first one after the drop of 51.4% in 2021, which was the lowest single year from 2004. The results for 2022 weren’t that great either – the recorded GGR was just MOP$42.2 billion, or US$5.3 billion.
The results are already here:
The recent results, after only a day of opened borders, show that the predictions were right: in only one day, 5,630 visitors passed the border between Hong Kong and Macau. The total number of visitors was 39,606, which is 153.5% higher than the average number of visitors per day.