Morgan Stanley says it remains “medium-term bullish” on the Macau casino sector, due to factors including pent-up demand within China for a variety of leisure services and spending, coupled with the inability currently of mainlanders to travel much further afield than Macau.

Referring to reports of capital controls out of the mainland potentially having a negative effect on high-roller play in Macau, analysts Praveen Choudhary, Gareth Leung and Thomas Allen noted: “For VIP, we see no spike in officials being disciplined and liquidity in the system remains abundant.”

The Morgan Stanley analysts also gave commentary referring to the third-quarter earnings season, which indicated six casino operators were either in, or soon moving toward, positive earnings before interest, taxation, depreciation and amortisation (EBITDA).

“Companies have cut their operating expenses meaningfully, suggesting higher EBITDA margin in 2021/22, which will also be helped by mix change (towards mass),” said the Morgan Stanley team.

“Upcoming catalysts include reinstatement of Individual Visit Scheme self-service kiosks, consumers getting used to being tested or availability of vaccine, and opening of the Hong Kong border without quarantine,” the analysts added.

A memo the same day from analysts DS Kim, Derek Choi and Jeremy An, of JP Morgan Securities, observed that what it termed a “path to normalisation” for the Macau casino sector, “could be choppier in a next phase of recovery into 2021”.

Editing by Rachel Hu

延伸阅读：