The impact of the coronavirus on the industry in Asia has been unprecedented and the pace of reopenings and return of demand remains “vague and uncertain to say the least,” Union Gaming wrote in a note.
The firm said that although equity values have already priced in much of the known downside, it is taking a conservative and neutral view on much of the region.
In Macau, it recommends being on the sidelines, in particular until there is greater clarity about the lifting of travel restrictions. Guangdong province, the largest source market for Macau’s casinos, imposed a 14-day quarantine on anyone returning from the gambling hub at the end of March, creating further headwinds for visitation.
“Considering Beijing just re-shut all gyms in the capital city again over the weekend due to concerns over new case reemergence, we wouldn’t expect the latest restrictions in Guangdong or Macau to be lifted any time soon, particularly as they relate to travel, which has been a key focus of China’s fight against the virus recently,” it said.
On a more positive note, it added that the aggressive containment measures could lead to a faster turnaround time. It sees gross gambling revenue to decline 75 percent in Q2, by 45 percent in Q3 and about 25 percent in Q4.
“We forecast a sequential recovery throughout 2021 with operators largely getting back to ~80 percent of 2019 GGR benchmarks by year end.”
For anyone looking to enter the market in the short term, it points to Galaxy Entertainment in Macau for its “near-term security and liquidity profile and long-term growth prospects,” as well as NagaCorp in Cambodia and Delta Corp in India.