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Bernstein analysts led by Vitaly Umansky, said in a note to investors Monday that the Macau Covid-related lockdown “may last longer than 7 days.”
The special administrative region on the south coast of China considered the world’s biggest gambling hub, closed its casinos after a coronavirus outbreak. The city has reportedly recorded 1,526 Covid cases since the middle of June.
However, Umansky said, “to date, Macau is still at the height of its biggest-ever COVID outbreak and has reported 1,785 positive cases since June 18.”
“Expectations are already in place for a very poor GGR [Gross Gaming Revenue] environment in July. We think the closure is not a meaningful fundamental impact, but could weigh on trading sentiment,” wrote the analyst. “Channel checks indicate that Macau’s July MTD GGR (July 1-10) was only MOP 200mn (US$24.8mm), with ADR of MOP20mm (US$2.48mm), -97% compared to July’19 ADR and -93% y/y compared to July’21 ADR (also down 76% m/m from June’22 ADR). The MTD GGR was significantly constrained by COVID measures and border closure.”
According to Bernstein, the average daily travel in and out of Macau from June 30 to July 9 was 769, -92% week on week, compared to 9,421 of the previous week (June 17 to June 29).
“We reduce July’22 GGR forecast to be down 98% vs. July’19 (ADR -85% m/m vs. June’22) and Aug’22 to be -90% vs. Aug’19, but could still be lower depending on length of Macau lockdown and travel restrictions. Stocks have been pressured by COVID outbreaks; however, long-term we remain bullish on Macau recovery driven by border reopening and led by mass/premium mass,” concluded Umansky.
