Cotai table minimum bets better than expected: MS

January 17, 2023 Macau Casino & Hotel Earnings & Filings

Brokerage Morgan Stanley Asia Ltd says the market is “comfortable” about seeing Macau visitor numbers return to pre-Covid levels, but that the spend per visitor is “unknown”. The commentary followed a recent visit by the brokerage’s analysts to Macau.

“Ease of travel between Hong Kong and Macau is similar to pre-Covid levels,” wrote analysts Praveen Choudhary, Gareth Leung, and Stephen Grambling in a Sunday note, following their “first trip” to Macau in three years.

According to the memo, the Morgan Stanley team walked around the casino floors of a number of Macau properties on Thursday and Saturday night, noting that most “Cotai casinos had at least 60 percent tables with players”.

“Minimum bets on the peninsula were generally MOP500 [US$62.20] and, in Cotai, MOP2,000, which is higher than our expectation considering low utilisation,” stated the analysts.

“We believe this will help the second-half 2023 and 2024 win, table, and day productivity numbers,” they added.

In a short accompanying audio, Mr Choudhary said the institution had learned during the visit to Macau that junkets “were not providing capital to premium-mass [customers], but only to a few VIPs that also used to play in mass areas”. Those, he added, made up a “small percentage of the overall mass-market business”.

Macau cancelled with effect from January 8 most of its travel restrictions related to the Covid-19 pandemic, dropping all testing requirements for inbound travellers from mainland China, Hong Kong and Taiwan. The authorities on the Chinese mainland also substantially eased from January 8 travel restrictions with Hong Kong and Macau, with most Covid-19 controls scrapped.

Macau is gradually resuming a number of transport services between the city and Hong Kong, as well as connections to cities in mainland China. The Morgan Stanley team said the frequency of ferries and buses between Macau and Hong Kong “can go up manyfold”.

“Land travel via the Hong Kong-Zhuhai-Macau bridge can easily bring more traffic compared to 2018,” it added.

More than 153,000 visitors entered Macau between Friday to Sunday, an average of just over 51,000 arrivals during the three-day period. The city recorded on Saturday its highest daily total of visitor arrivals – at 55,845 – since a local Covid-19 outbreak in mid-June last year, according to official data.

According to a Macau government estimate in 2019, the city can only accommodate up to 40 million visitors per year. But since then, “Macau has added 15 percent casino rooms and expanded capacity at different immigration channels and introduced high-speed stations,” stated Morgan Stanley.

The institution added: “Thus, Macau can support much high visitor numbers in future. This could help Macau generate higher mass revenue, if spending per capita can be maintained.”

Based on the brokerage’s observations, minimum bets on many of the city’s casino tables “have not been lowered (despite lower visitation), which should support higher table productivity”.