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Macau’s Q1 gross gambling revenue breakdown clearly shows the mass market pulling ahead of the VIP sector, which is struggling to recover from the double-whammy of Covid and policy pressures in China.
Mass market baccarat accounted for 51 percent of Macau's gross gambling revenue in the first quarter of this year, according to figures released by the Gaming Inspection and Coordination Bureau.
Consensus estimates for Q1 earnings at Macau’s six operators may be too high, with corporate EBITDA likely to be lower than the prior quarter due to an uneven recovery and higher expenses, Morgan Stanley says.
Nagacorp said its mass market business continued to improve in Q1, gaining sequentially from the second half of last year and returning to about 99 percent of its Q1, 2020 levels before the pandemic took hold.
Galaxy Entertainment has become an investor favourite and is likely to boost its mass and premium mass market share as the Macau market recovers, Bernstein Research wrote in a note upping its target share price on the company.
Las Vegas Sands Chairman and CEO Rob Goldstein said the company "firmly believes" the Macau market will recover and will benefit in the future from infrastructure developments throughout the Greater Bay Area.
Around 20 percent of all mass market revenue in Asia may flow back to Macau by 2022, Morgan Stanley estimates in a note.
The introduction of a digital renminbi into Macau would potentially have a positive impact on the gaming industry, easing cash flow for mass and premium mass players, but the “devil would be in the details,” says Bernstein Research.
Macau's gross gambling revenue in the fourth quarter of 2020 was MOP22 billion ($2.75 billion), with mass market baccarat and slots making up about 65 percent of the total, according to quarterly figures released by the Gaming Inspection and Coordination Bureau.
Sands China and Galaxy Entertainment should be viewed as long-term investment opportunities once Macau visitor volumes return due to their high installed capacity and expansion plans, Bernstein Research said in a note.