It would appear that the lights are about to be turned up on Macau’s casinos. With 20-year concessions expiring next year, the government has released a list of changes it would like to implement, several of which appear similar to those launched recently under Beijing’s “Common Prosperity” drive. The way these were unveiled and the perceived lack of detailed explanation by the government has sent stocks tumbling.
Are investors over-reacting? It might depend on ROI time horizons. A big shift is under way, but it has been years in the making and will take decades to play out. Now is a good time to be considering the long-term opportunity, remembering what makes Macau special. This is especially when looking more closely at the development of neighboring Hengqin, a special zone on an island next door to Macau’s Cotai district, which is more than three times the size of the whole of Macau.
With this in mind, GBI has prepared a report looking ahead to beyond the awarding of new gaming concessions, which should happen sometime before the old ones expire in June next year (2022). Under this 10-year outlook, it is likely that strong growth will resume as the Hengqin Port becomes the main entry point to Macau and Beijing works with Macau to make the pioneering integration project a success. It is envisaged that GGR could double from pre-pandemic levels by 2031 as Macau’s merger with Hengqin drives mass visitation.
The main risks are macro: Disease containment and socio-economic stability in the hinterland.
Please get in touch for a copy of the report, which is only available to clients of GBI’s consulting service.