[ET Net News Agency, 22 November 2019] Nomura said it is positive about the eventual
resurrection of GGR (gross gaming revenue) growth in Macau in 2020, but the research house
believes that 4Q will be tough.
Estimates, for the most part, are too high because VIP volumes in November are soft and
December could be worse because of tighter security measures and access problems during
President Xi's visit. Moreover, the timing of CNY in January typically leads to softer
December volumes.
That said, Nomura believes that the longer-term trend in the stocks can continue into
next year for the following reasons: (1) Macau/Beijing could lift visa restrictions; (2)
Macau's light rail will improve access to Cotai, and the Guandong-to-Henquin rail spur
could cut wait times by 3-4 hours; (3) The decline in VIP GGR slows. It could turn
positive in 4Q 2020; (4) Operator margins and EBITDA should lift as the mix of Mass GGR
rises; and (5) Macau's new chief executive will give operators more clarity on government
expectations/direction for future investment, which could lead to relief of concession
renewal worries. (KL)