For the second time this year and global brokerage and investments firm Morgan Stanley has reportedly cast doubts on the near-future profitability of the Macau casino industry owing to the lingering impacts of the coronavirus pandemic.
According to a report from Inside Asian Gaming, the New York-headquartered financial services giant has lowered its combined earnings before interest, tax, depreciation and amortization prediction for the 41 casinos in Macau this year by 69% from $2.8 billion to $867 million. The source detailed that this move comes only about four months after the same organization reduced its aggregated 2021 gross gaming revenues forecast for the former Portuguese enclave by some 19% to approximately $16.3 billion.
Morgan Stanley reportedly moreover cut its associated estimate for next year’s combined Macau casino earnings before interest, tax, depreciation and amortization by 29% to $6.4 billion off of revenues that it now expects to be 27% lower than previously envisioned at something nearer $12.5 billion. To make matters worse and the enterprise furthermore slashed its associated aggregated 2023 income prognosis by 23% to $9 billion and expects accompanying receipts to come in 14% lower at roughly $31.5 billion.
Morgan Stanley analysts Gareth Leung, Thomas Allen and Praveen Choudary reportedly used an official filing to explain that the forecast reductions come as casinos in Macau are continuing to experience reduced visitation levels owing to a range of coronavirus-related travel restrictions. The trio purportedly proclaimed that these controls are not likely to be removed any time soon to keep combined visitation levels at approximately 25% of their pre-pandemic intensity, which would result in lower aggregated gross gaming revenues.
Reportedly read the filing from Leung, Allen and Choudary…
“We are confident about pent up demand, which should eventually drive future mass revenues to be higher than in 2019 based on China’s retail sales and Vegas gaming revenues. But, with a zero-tolerance policy, lower efficacy for certain vaccinations and the ‘delta variant’, recovery could be months or years away.”
Inside Asian Gaming reported that the three Morgan Stanley analysts additionally gave their opinion on Macau’s upcoming casino license re-tendering process and forecast that the entire exercise could be completed sooner rather than later so as to remove the prospects of ‘overhang.’ The trio purportedly went on to predict that the local government looks likely to maintain the ‘status quo in terms of number of licenses and tax rate’ which are both positive developments in the face of earlier investor concerns.
The filing from Leung, Allen and Choudary reportedly read…
“We are more concerned about re-opening because Macau gaming will thrive and casino licenses will be awarded and/or renewed but the timing of full border openings between Hong Kong, Macau and China is still unknown.”