Macau Financial Performance for First Half of 2021
It’s the season of earnings calls and financial reporting as companies around the world pour over their top-line results for the opening six months of the year. Given the tumultuous business environment that casinos across Asia have been operating under for the last year and a half, it goes without saying that some of the initial accounting metrics look catastrophic. Throughout this article, we’ll dive into the financials of some of the region’s biggest players.
Despite the poor financial performance in the first half of the year ended 30th June 2021, investor confidence remains high. This is due to the expectation that revenues will pick up once the casinos begin to allow footfall to increase. ©lifeP/Pixabay
Investor confidence in Macau is surprisingly high considering the abysmal revenue figures for the first half of 2021. Across the board, the region has dealt with a myriad of issues from fresh regulatory crackdowns, difficulties getting customers into the casinos due to quarantine restrictions, and a general tightening of the belts from would-be clients.
When the markets look at their lowest that is when those companies that have been managing their operations with due diligence show their resilience. As Warren Buffet once remarked, it’s only when the tide goes out that you find out who is swimming naked. This is certainly the case with the modern economy, many debt-ridden and poorly managed enterprises have collapsed during the pandemic. Those that had the foresight to prepare for difficult times are still alive to capitalize on the impending resurgence.
Over the course of the next 12 months, there is expected to be a major jump towards innovation within this sector. Start-ups and entrepreneurs continue to attack the iGaming sector from a multitude of angles, and despite the tough first 6 months to the year, a big resurgence in gross gaming revenues is certainly a strong possibility.
Macau Casinos Take 75% Revenue Hit in H1 2021
The ongoing pandemic has had a clear and decisive adverse effect on the group’s revenue streams. The main brunt of the downturn will be distributed across several key business units; technical sales dropping by 80%, consulting and technical services down by 41%, and gross gaming revenue down by some 76% during the period.
These initial results have been taken from the financial reports that have been published so far by the city’s biggest international casinos. Whilst the results are mostly based on raw data that has already been taken from the casinos, an audit will be needed before the information extracted can be used in any meaningful way. This audit is expected to take place around August 13th.
Macau’s managing committees have put forward several possible solutions to try and reinvigorate the revenue streams that the city is so heavily reliant upon. But so far none of them have been much of a success. The proposed travel bubble between Macau and Hong Kong has all but failed to materialize, and the lack of any indication when this scheme will be up-and-running has left casino bosses incredibly frustrated and bewildered with the lack of progress.
Unlikely Stricter Quarantine Measures Will Be Introduced
The current status of COVID measures in Macau means that it remains unlikely any further or more strict rules will be implemented. Whilst the situation on the ground is certainly not improving, the government has shown resistance to calls to bring about fresh restrictions. With case numbers very much under control, there is little appetite for a fresh full-scale lockdown. All of this is good news for the casino bosses of course.
Recent outbreaks have been quickly stifled out. One such instance took place at the Nanjing Lukou International Airport, which resulted in 144 people being placed in quarantine. Despite these panicky moments, the nation has been able to effectively manage its exposure to the virus up until now. With many international flights arriving around the clock in Macau from Taiwan and Southeast Asia, it goes without saying that there are often infection outbreak scares in the city.
However, despite the recent fears of fresh outbreaks gripping Macau, there is clearly a little appetite for the casino bosses in Asia to continue offering concessions to the government. There is a strong desire to return to business as usual in Macau, and with the increased attention being given to health and safety measures and the acceleration of the vaccine rollout, it seems like the community in the immediate vicinity is set to return to normal.
