Brokerage Says Genting Malaysia Unlikely to Win 10-Year Macau Gaming License

Summary

• Sanford Bernstein does not expect GMM Ltd to be successful in its bid for a 10-year Macau concession
• The company could instead position itself as a potential rescuer for financially-challenged incumbents
• GMM Ltd is an indirect subsidiary of casino operator Genting Malaysia

The bidding period for Macau’s gaming concessions closed on September 14, with all six incumbent operators submitting their proposals.

In a surprising development, a seventh bidder showed up, which means one of the current concessionaires could be dropped from the list should authorities ultimately decide to give chance to the new applicant. But that is unlikely, according to brokerage firm Sanford C. Bernstein Ltd.

GMM Ltd Could Serve as “Rescuer”

The seventh company in question is GMM Ltd., an indirect subsidiary of Genting Malaysia, the owner and operator of Resorts World Genting in Malaysia. The addition of GMM Ltd to the list of bidders for Macau’s 10-year gaming concessions has led to speculations Wynn’s position could be at risk, as many believe that among the six incumbents, Wynn is confronted with the biggest challenges.

However, Sanford C. Bernstein analysts Shirley Yang and Vitaly Umansky said in their latest note that if there’s one company dealing with a lot of issues, it would be SJM Holdings Ltd. Nevertheless, both analysts don’t think GMM Ltd would take the place of any of Macau’s existing concessionaires.

The company may instead act as a “rescuer” if an incumbent concessionaire suffers financial difficulties. GMM Ltd could either partner with an incumbent or acquire it altogether with government consent, the brokerage said.

Incumbents will Retain their Licenses

Macau’s casinos have been dealing with financial challenges as a direct impact of the pandemic. As China pushes on with its zero-COVID policy, analysts predict full recovery won’t happen until 2024. Gross gaming revenue (GGR) will stay low and could continue to drop as travel restrictions remain in place.

Based on the latest figures, Macau’s daily GGR fell 20 percent week-on-week to just MOP75 million (US$9.3 million) for September 15 to 18. That compares to the MOP94 million average daily GGR generated from September 5 to 12.

While it does not expect Genting Malaysia to be successful in its current bid for a 10-year gaming concession in Macau, Sanford Bernstein said the company could proceed with building its presence in Macau and strengthening its relationship with Chinese authorities. Its experience and background in running non-gaming businesses in Malaysia and Singapore may also benefit the company in the long run.

But for now, the prospect of Genting Malaysia and its subsidiary GMM Ltd winning a 10-year Macau concession is quite dim, according to the broker.