Macau’s October gaming revenues have been unable to sustain the seasonal rally seen during the Golden Week holiday in China at the beginning of the month, say several brokerages.
“Our channel sources indicate that VIP liquidity remains weak following a brief rebound during Golden Week while mass [play] declined after strong visitation and play during Golden Week,” said a note on Monday from Sanford C. Bernstein Ltd in Hong Kong.
“Last week’s (ending October 18) average daily revenue was a disappointing MOP486 million [US$60.8 million], the lowest level seen since June 2010 (and over -40 percent below similar period in 2014),” wrote the firm’s analysts Vitaly Umansky, Simon Zhang and Bo Wen.
“The rally in Macau stocks that began on October 1 through last week will be short lived if gross gaming revenue [GGR] numbers do not begin to ramp up especially after Studio City’s opening next week,” added the Sanford Bernstein team. They were referring latterly to the launch on October 27 of the US$3.2-billion Studio City gaming resort on Cotai, which analysts have said is likely at opening to receive approximately 200 new-to-market tables from the Macau government. The resort is 60-percent owned by Melco Crown Entertainment Ltd.
Analysts at Daiwa Securities Inc in Hong Kong stated in their Monday note on Macau: “At current run rates, we continue to expect the full-month October GGR to see a 32 percent year-on-year decline and likely come in at around HKD17 billion [US$2.19 billion] to HKD18 billion, but highlight that there is potential downside risk to this as we have factored in potential GGR recovery from Studio City’s opening at the end of the month.”
The team of Jamie Soo, Adrian Chan and Jennifer Wu added: “Our on-the-ground research reveals continuous weakness in both betting volumes and hotel bookings post Golden Week.”
Cameron McKnight of Wells Fargo Securities LLC said in a Monday note that investors should expect “slightly lower than normal October seasonality” in Macau GGR for this month.
“We project -26 percent to -29 percent year-on-year for the month of October. This assumes roughly MOP570 million to MOP580 million [average daily revenue] for the rest of the month,” said Mr McKnight. He added this would mean month-on-month growth of 16 percent, “slightly lower than normal historical October seasonality” of a 20 percent month-on-month average improvement.
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"We forecast Grand Lisboa Palace will have EBITDA of HKD2.0 billion (US$260 million) with 330 tables by 2022, and HKD3.5 billion with 380 tables by 2023"
Credit rating agency Fitch Ratings