Earnings of casino firms in the Macau market “have not bottomed” despite the current attractive valuations for the stocks of such firms.
So said banking group Morgan Stanley in a Monday report. The institution cut its forecast for 2019 year-on-year performance in Macau casino gross gaming revenue (GGR) to -3 percent, from -1 percent year-on-year previously.
For 2020, Morgan Stanley is currently anticipating 3 percent GGR expansion year-on-year, compared to its previous estimate of 8 percent growth.
“Despite our expectation of September GGR growth of 4 percent year-on-year (after two months of negative growth), we expect negative GGR growth in November/December,” wrote analysts Praveen Choudhary and Thomas Allen.
“Many macroeconomic indicators are suggesting a VIP recovery between now and December, yet VIP revenue has deteriorated further in the past three months,” they stated.
“An even bigger concern is mass revenue, which has remained robust (more than 10 percent [growth] year-on-year in the first eight months), but could turn slower in fourth-quarter 2019, to single digits,” added the analysts.
“Our concerns include slower premium mass business (commentary by various operators, including Sands China and Wynn Macau), as well as slower growth in room nights sold, owing to delays in new hotel openings.”
The institution stated it was now forecasting mass revenue growth of 10 percent this year and 7 percent in 2020, while VIP revenue was expected to decline 17 percent this year and 2 percent next year.
The institution stated: “Mass revenue is generally helped by overnight visitations, which, in turn, are helped by increase in hotel rooms, and both of these are slowing down as new capacity additions have been delayed.”
Brokerage Deutsche Bank Securities Inc said in a research note in August it expected the number of hotel rooms in the Macau market to grow by about 1 percent in 2019; by about 11 percent in 2020; and by circa 7 percent in 2021.
Morgan Stanley stated it expected the opening of the approximately 1,900-room, HKD39-billion (US$5 billion) Grand Lisboa Palace casino resort, SJM Holdings Ltd’s first foray into the Cotai market, to be delayed until January 2021. The casino firm – which will see its existing Macau gaming licence expire in June 2022 along with those of the other five operators – has most recently mentioned publicly a second-half 2020 launch for the property.
Dec 10, 2019The Taipa to Cotai section of Macau’s Light Rapid Transit (LRT) system (pictured in a file photo), which opened on Tuesday afternoon to the public, might see “20,000″ passenger journeys...
Dec 09, 2019Macau junket brand Suncity’s move toward being a casino...
Nov 06, 2019A senior official of Japan’s Nagasaki prefecture has...
Jul 15, 2019Hong Kong-listed casino operator and developer NagaCorp Ltd...
Jul 12, 2019Asia-based casino logistics provider TKHS Group has plans...
Jul 04, 2019Japan’s Nagasaki prefecture and Sasebo city aspire to...
”We received … positive feedback from partners, visitors and exhibitors, encouraging our consideration for the next edition”
Chief operating officer of Reed Exhibitions Greater China, organiser of the G2E Asia @ the Philippines