Macau licenses to last 10 years: Goldman

The new gaming license in Macau may last for up to 10 years, which is in line with Singapore’s gambling license renewal period, said an executive of SJM (0880) quoted by a Goldman Sachs report.

And the US investment bank estimated in the report that the current operators will have their licenses extended for one year, then the license will be renewed until 2038.

The Macau government’s suggestion of introducing local citizens as executive directors to gaming operators does not mean diluting the stake of the controlling shareholder, as they are to join the license-holding entity but not the listed arm, said the SJM management.

Under the current system, the regulator requires license-holding companies to must have a local Macau resident who holds a 10 percent stake as an executive director.

The SJM management also pointed out that the government has not suggested the introduction of government representatives to the board of directors.

Currently, the Macau Gaming Inspection and Coordination Bureau has already sent representatives to the casino. So it will not affect daily operations if the government representatives are introduced, said the management.

As for the need to obtain government approval for paying dividends, the company’s management said this may be due to the fact that there have been cases in the past where companies paid such heavy dividends that the remaining cash was not enough to cover daily operations, raising the government’s concern about the liquidity risk of gaming operators.

The future of gaming licenses remained unknown but some anxious investors have already taken actions.

The Capital Group, one of the major shareholders of Wynn Macau (1128), reduced its holdings of 17.294 million shares of the company and cashed in HK$102 million on Monday, data from the bourse showed.

Meanwhile, Macau casino gross gaming revenue from September 13 to 19 fell 8 percent week-on-week largely due to “volatile VIP” business,” said brokerage Sanford C Bernstein in a Monday note. The same week’s gross gaming revenue was down 66 percent compared to the same period in 2019, which was pre-Covid trading times, the note added.

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