International edition
December 02, 2020

The gross revenue recorded in the first two months of 2020 saw a drop of 49.9%

Macau casinos revenue down nearly 90% in February due to coronavirus outbreak

Macau casinos revenue down nearly 90% in February due to coronavirus outbreak
"We do not think COVID-19 will curb gamblers’ enthusiasm in a sustainable way, so its impact on the industry’s sustainable earnings power should be limited," said JPMorgan Chase & Co. analysts.
Macau | 03/03/2020

Even after the partial resumption of business around Feb. 20 after a 15-day closure, gaming floors have seen few footfalls as China continued to halt individual and group visas to Macau and restrict transportation. JPMorgan is forecasting a 24% decrease in gross gaming revenue for the year.

C

asinos in Macau, the Chinese territory that’s the world’s biggest gambling hub, reported a record drop in gaming revenue, as they are facing the cost of closing down their businesses for 15 days to help contain the deadly coronavirus outbreak.

Gross gaming revenue was 3.1 billion patacas (USD 386.5 million) in February, down 87.8% from a year earlier, according to data from the Gaming Inspection & Coordination Bureau. In a survey, analysts had predicted a median 90% slide. The drop follows another recorded in January, when gross revenue fell 11.3% to 22.126 billion patacas.

The gross revenue recorded in the first two months of the year registered a drop of 49.9% to 25.229 billion patacas (USD 3.153 billion), against 50.312 billion patacas (USD 6.289 billion) in the same period of 2019.

The slump follows a decision by Macau’s government to suspend casino operations from Feb. 5 for just over two weeks, dealing another blow to the gambling mecca that’s already struggling to recover from a revenue decline in 2019. The closure was the longest on record and only the second such instance, after a typhoon in 2018 forced a 33-hour shutdown.

Even after the partial resumption of business around Feb. 20, gaming floors have seen few footfalls as China continued to halt individual and group visas to Macau and restrict transportation in a prolonged fight against the spread of the virus.

“Looking at the glass half-full, we feel it could have been worse given the extensive level of disruption suffered,” according to a March 1 note by JPMorgan Chase & Co. analysts including DS Kim in Hong Kong.

While they expect the near-term outlook to be “murky,” stocks could move higher on “less bad” trends, they said. “We do not think COVID-19 will curb gamblers’ enthusiasm in a sustainable way, so its impact on the industry’s sustainable earnings power should be limited.”

JPMorgan is forecasting a 24% decrease in gross gaming revenue for the year, based on the expectation of a 70% slump in March and 35% decline in the second quarter, before narrowing the decline to 8% in the following three months, followed by a 5% bump in the final quarter. Pretax earnings will likely fall 30%.

At the end of 2019 Macau had 41 casinos, 22 of which managed by Sociedade de Jogos de Macau, six by Galaxy Casino, five by Venetian Macau, two by Wynn Resorts Macau, four by Melco Crown and two by MGM Grand Paradise, with 6,739 gaming tables and 17,009 slot machines.

The respiratory disease has killed more than 2,900 people, most of them in China, while the number of infections has topped 85,000 globally. Measures to control the epidemic and people’s reluctance to visit crowded places have curtailed spending, weighing on China’s $14 trillion economy, half of which has remained idle since late January.

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