Since the outbreak of COVID-19, Macau authorities have continued to strictly regulate the virus from attacking the SAR.Due to strict quarantine orders and travel restrictions, few people are infected in the area.
Macau casinos have been trying to recover in the last few years, but due to regulations the venue has not reached pre-COVID numbers.Now, new outbreaks are pushing the limits of casinos, which can lead to liquidity issues and the need for funding.
Outbreak of new COVID-19
Over the weekend, Macau health officials announced that 19 people were identified with COVID-12.Since then, a total of 31 patients have been identified.Gaming analysts now feel that the news will have a major impact on the already struggling casino industry. SAR's total game revenue (GGR) is expected to drop to near zero.
According to media reports, JP Morgan's DS Kim and Livy Lyu say the casino is up and running at the moment, but it's no wonder that the GGR is close to zero for a few weeks.Inbound visit rates, if any, will be negligible.
According to analysts, Macau's Treasury Secretary has said the casino will not be closed, raising the issue of visitors to Japan.Visits to Macau will be severely restricted and will probably be blocked due to the virus.Depending on the duration and extent of the virus outbreak, your bottom line will drop significantly for a week or more.
Liquidity is a concern
Liquidity is a concern for casino operators because they are not profitable. In order to acquire and maintain new concessions during rebids after 2022, gaming facility operators have a net worth of MOP 50 billion ($ 6 million) in the concession. Authorities have just revealed that it must.
This amount seems to have to be maintained in cash during the bidding and before the start of operations in the new concession if the operator approves.This cash must be held separately from the cash held by the concession operator.
Analysts have revealed that Sands and SJM are the least liquid and can only secure funding until March 2023.Other operators, such as Melco, Win, and MGM, have sufficient liquidity to survive the outbreak of COVID-3, with up to two years of liquidity. The Galaxy is even longer and can secure liquidity for about five years.
All operators are expected to survive the new outbreak, but some will feel pressured in terms of liquidity.
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