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Macau GGR to reach 25% of pre-COVID levels on easing of Guangdong border restrictions: analysts

Macau’s gross gaming revenue could quickly reach up to 25% of 2019 levels following Monday night’s long-awaited news that the 14-day mandatory quarantine requirement imposed by Guangdong Province on all visitors from Macau will be removed from 15 July.

And that figure could jump to 70% of pre-COVID levels should the Individual Visit Scheme be reinstalled in the near future, according to analysts.

The governments of Macau and Guangdong Province have mutually agreed to ease border restrictions on citizens returning to mainland China, with all visitors crossing borders between Macau and Guangdong Province no longer required to undergo 14-day mandatory quarantine. They will, however need to show a negative COVID-19 test result within the previous seven days and hold “green” health codes of Macau and Guangdong.

With Guangdong Province accounting for around 46% of all mainland Chinese visitors to Macau in 2019 and between 30% to 35% of GGR, analysts on Tuesday estimated that GGR levels would immediately see a spike upon the easing of quarantine requirements at 6am on 15 July.

“With only Guangdong to be reopened and no re-issuance of IVS yet (existing visa will be expiring soon and players can mainly use business visa), in the near term we believe GGR could recover gradually to 15% to 25% of pre-COVID levels,” said Credit Suisse analysts Kenneth Fong, Lok Kan Chan and Rebecca Law. The trio noted that Macau’s GGR before the 14-day quarantine for residents returning to Guangdong was first imposed on 27 March was around 30% of usual levels.

JP Morgan’s DS Kim, Derek Choi and Jeremy An offered a similar prediction of industry GGR improving to between 20% and 25% of 2019 levels, or MOP$150 million to MOP$200 million per day, in the coming month, “which will be a litmus test for the size of pent-up demand, helping to set a base-line for 2021 recovery.”

They also estimate a more significant recovery should the IVS visa scheme also be reinstated soon to roughly 70% of normal levels, with VIP revenue potentially growing to between 80% and 90% and mass between 50% and 60%.

“Once the Macau-Guangdong travel bubble is proven successful (e.g. no hike in COVID-19 for a few weeks), we believe China’s government could further open up the border to non-Guangdong in phases, along with the resumption of visas,” the analysts said.

“We’d guestimate demand normalization should occur within two to three quarters post the re-opening, and we are hopeful that industry GGR could fully recover by around 2Q of next year unless there is another wave of COVID-19 in China.”

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