Reintroduction of Chinese eVisas Bode Macau Gambling Industry Recovery

According to an analysis by JPMorgan, positive EBITDA for Macau casino operators could be expected in December, following China’s National Immigration Administration (NIA) announcement that on November 1 it is going to introduce new electronic visas for mainland residents that want to visit Macau.

Resumption of eVisas Will Probably Bring Casino Operators to Positive EBITDA in December

Inside Asian Gaming published a recap of an analysis by JPMorgan analyst DS Kim who discussed the expected impact of the NIA announcement on the Macau gambling industry.

The good news according to Kim is that there will not be a gradual roll-out of the electronic visas or so-called eVisas but 49 Chinese cities will all be eligible for eVisa starting from November 1.

The procedure will not differ much from the one that was in place before the COVID pandemic started. Mainland residents will be able to instantly get a visa. They can just go to the visa-issuing authority and get the necessary electronic document right away without arranging any meeting or interview in advance. There will also be no waiting time to get the visa but it will be processed immediately.

Kim, of course, predicts that this will be great news for all casino operators in Macau and expects a spike in gross gaming revenue (GGR) in the next few months.

This, however, will be a gradual process as China is currently hit by lockdowns again which thwart most travel plans.

The JPMorgan analyst forecasts that a significant improvement will be achieved in December when gambling operators may even reach positive EBITDA again. However, for that to happen GGR needs to reach 35% of its pre-pandemic levels.

Macau Casino Operators’ Q32022 Results Sparked a Negative Prognosis

This positive prognosis sparked by the resumption of eVisas is in stark contrast with the expectations reported after the Macau gambling industry posted its financial results for the third quarter of 2022.

The industry reported losses of $1.5 billion for Q32022 and the cumulative EBITDA for all companies was a negative number.

Based on that the top brokerage Morgan Stanely predicted that the net debt for the Macau casino industry may soon reach $24 billion. The brokerage also highlighted that the pre-COVID net debt for the industry was about $5 billion.

Despite these gloomy numbers, there was light at the end of the tunnel. When comparing September 2022 with August 2022, there was a 36% increase in GGR. While the September GGR was 50% lower than the same period in 2021, the positive trend seen in the August-September comparison pointed to the ongoing gradual recovery of the industry.