Analysts tipping 6 to 12-month concession extension following completion of Macau gaming law consultation

The commentary from analysts DS Kim, Amanda Cheng and Livy Lyu follows completion of the fourth and final public consultation session on proposed revisions to Macau’s gaming law on Monday, with the 45-day period for public submissions set to close this Friday 29 October.

While the government has recently picked up the pace in preparation for the expiration of all six concessions on 26 June 2022, Kim, Cheng and Lyu believe the timeline for issuing new concessions by then is looking increasingly tight.

“The next milestone will be the summary report on public consultation, which the government is required to publish before mid-March (180 days from public consultation),” they wrote in a Tuesday note.

“This will be followed by submission of the final draft on the revised gaming law which, once approved by the Legislative Assembly, will set the basis for concession re-tendering. A public bidding process should then follow, from which the government will pick the next concessionaires.

“While it’s not impossible to finish all this before the expiry, we do think it’s a very tight schedule and we wouldn’t be surprised if the government extends the current term by 6 to 12 months.”

The analysts aren’t alone in that view. Wynn Macau Ltd wrote in its 2021 interim report recently that it expects its concession to be either “renewed or extended beyond June 26, 2022” while SJM Holdings Vice Chairman and CEO Ambrose So has called for licenses to be extended for at least 12 months to allow operators some time to recover from the financial impact of the COVID-19 pandemic.

Discussing the public consultation itself, JP Morgan noted there was some positive news to emerge from the government’s responses to various questions it had fielded from the public – potentially allaying investor concerns over certain revisions.

“While there was no clear evidence, we do think the government’s ‘tone’ was somewhat reasonable, in turn alleviating concerns on the worst-case scenarios to some extent,” they wrote.

“The very fact that officials are trying to re-assure public on these key concerns could indicate the government is approaching this process in a fair and reasonable way, we think (or hope), although the visibility on the final outcome still remains low.”