THE transition to co-existing with COVID-19 and expectation of a progressive relaxation of movement and border restrictions into 2022 are key factors in Fitch Ratings expectations of a recovery in the gaming sector in Singapore and Malaysia.
“Initial steps in the reopening of both countries’ economies were taken in 2021 following the rollout of vaccinations to a large proportion of adults,” observed the international rating agency.
“However, a slower-than-expected recovery in 2022 despite any further relaxation of measures could indicate that the operators face structural challenges as they look to return to pre-pandemic visitor levels.”
Fitch Ratings expects Singapore’s revenue to recover to around 75% of 2019 levels in 2022 from 50% in 2021 with the gradual border reopening likely to be the main driver of the recovery.
As for Malaysia, resilient domestic demand will be the key driver of the rebound to 65% in 2022 from 25% in 2021.
“However, we expect operators’ margins to remain intact due to more streamlined operations and digitalisation despite visitor numbers likely to remain below pre-pandemic levels,” opined the rating agency in a 2022 global gaming outlook report.
More broadly, Fitch Ratings expects global gaming operating environments to improve with those geared toward domestic visitation poised to grow in 2022 to reach or exceed pre-pandemic levels.
“Jurisdictions with faster vaccination roll-outs and ‘living with the coronavirus’ mentalities like the US are experiencing stronger recoveries than those that rely on international visitation,” projected the rating agency.
Regulatory uncertainty will be a key global theme in 2022, according to Fitch Ratings. In Macau, concessions expire in June and uncertainty remains on the concession rebidding process and future regulatory and operating structure.
For Australia, license suitability is still overhanging both major operators. Restrictions on digital gaming such as bet size and loss limits are expected to continue in Europe.
However, European operators have a better ability to absorb these regulatory headwinds compared with Australian/Macau operators who will face more limited options stemming from any adverse licensing outcomes.
Most Fitch-rated gaming issuers have been taken off Negative Outlook given their strong domestic recoveries. However, Negative Outlooks are still prevalent in the Asian Pacific (APAC) region, particularly those more reliant on international visitation. – Nov 24, 2021
