An employee wearing a protective face mask works behind the empty reception counter at the Galaxy Macau casino and hotel. Picture: JUSTIN CHIN/BLOOMBERG/GETTY IMAGES
An employee wearing a protective face mask works behind the empty reception counter at the Galaxy Macau casino and hotel. Picture: JUSTIN CHIN/BLOOMBERG/GETTY IMAGES

Hong Kong — Casinos in Macau, the Chinese territory that’s the world’s biggest gambling hub, reported a record drop in gaming revenue, as they grappled with the cost of closing down their businesses for 15 days to help contain the deadly coronavirus outbreak.

Gross gaming revenue was 3.1-billion patacas ($386m) in February, down 87.8% from a year earlier, according to data from the Gaming Inspection & Co-ordination Bureau. In a survey, analysts had predicted a median 90% slide.

The slump follows a decision by Macau’s government to suspend casino operations from February 5 for just over two weeks, dealing another blow to the gambling mecca that is struggling to recover from a revenue decline in 2019. The closure was the longest on record and only the second such instance, after a typhoon in 2018 forced a 33-hour shutdown.

Even after the partial resumption of business around February 20, gaming floors have seen few footfalls as China continued to halt individual and group visas to Macau and restrict transportation in a prolonged fight against the spread of the virus.

“Looking at the glass half-full, we feel it could have been worse given the extensive level of disruption suffered,” according to a March 1 note by JPMorgan Chase analysts including DS Kim in Hong Kong.

While they expect the near-term outlook to be “murky”, stocks could move higher on “less bad” trends, they said. “We do not think Covid-19 will curb gamblers’ enthusiasm in a sustainable way, so its impact on the industry’s sustainable earnings power should be limited.”

JPMorgan is forecasting a 24% decrease in gross gaming revenue for the year, based on the expectation of a 70% slump in March and 35% decline in the second quarter, before narrowing the decline to 8% in the following three months, followed by a 5% bump in the final quarter. Pretax earnings will likely fall 30%.

The respiratory disease has killed more than 2,900 people, most of them in China, while the number of infections has topped 85,000 globally. Measures to control the epidemic and people’s reluctance to visit crowded places have curtailed spending, weighing on China’s $14-trillion economy, half of which has remained idle since late January.

Bloomberg