Morgan Stanley Global Securities and Investment Company Morgan Stanley slashed its 2021 forecast for total gaming revenue for Macau.
The financial services giant says it now expects casinos in the former Portuguese enclave to bring in $16.3 billion in annual gaming revenue, about 19% below its previous forecast. The downgrade came as local government officials continued to enforce widespread coronavirus-related restrictions on people traveling to and from Macau, Hong Kong and mainland China, the sources added.
The disruption of the coronavirus pandemic, which amounts to about $7.5 billion, has led to disappointing total gaming revenue. Since then, with many restrictions eased, Morgan Stanley has previously explained that it expects its final figures for 2021 to show an improvement of about 168% year-over-year.
Morgan Stanley analysts Thomas Allen, Gareth Leung and Praveen Chaudhary reportedly used official filings Sunday to declare that casinos in the region were still waiting for revenue and revenue to “normalize” after 26 months of coronavirus-related turmoil. To that end, the trio reportedly leaked that Macau should restore the electronic application system for IVS (Individual Visa System) exit passes, resume issuing group travel visas, and start allowing people from Hong Kong and mainland China to enter freely.
They expect this step to occur during the second half of the year to enable casino operators in Macau to raise their annual gross earnings before interest, taxes, depreciation and amortization to about $2.8 billion, representing a nearly 37% drop from their previous estimate of $4.6 billion. The city’s gambling properties reportedly reached $9.2 billion in total revenue in 2019, and its latest forecast expects its 2022 tally to rebound to nearly $9.3 billion.
Furthermore, casino operators in Macau have raised more than $8.5 billion in new debt together since the start of the coronavirus pandemic, which features an average interest rate of 5%.