Brokerage Daiwa Securities Group estimates that most of Macau’s VIP gaming promoters, also known as junket operators, are “struggling just to break even” in the current business environment.
“A high proportion of junkets are loss-making today, especially true if we include the impact of the sector’s estimated bad debts,” said Daiwa in a report.
Junket operators, who lend money to high rollers, are still under significant operating pressure with at least HK$30bn (US$3.87bn) in bad debt still outstanding, said analysts Jamie Soo and Adrian Chan in Hong Kong.
The report later qualifies this HK$30bn figure as “healthy” bad debt, but notes it excludes receivables related to side-betting, stale and “bad” bad debts and “is a very conservative estimate.” The analysts say that based on their calculations, the total debt outstanding in the Macau VIP segment “could easily be double at HK$60bn or more.”
