Casino gross gaming revenue (GGR) in Macau fell by 5.0 percent year-on-year in January to MOP24.94 billion (US$3.09 billion), according to data from the city’s Gaming Inspection and Coordination Bureau released on Friday.
According to Macau government data reviewed by GGRAsia, January marked the first shrinkage in monthly GGR since mid-2016.
Union Gaming Securities Asia Ltd analyst Grant Govertsen said in a note following the regulator’s announcement that January’s GGR result had “handily beat” investment analyst consensus estimates. “We are encouraged by the January results and view the market as being more robust than it gets credit for, especially given the timing of Chinese New Year this year,” Mr Govertsen wrote.
According to investment analysts, it is not unusual for Macau gambling volumes to moderate immediately before Chinese New Year – which in 2019 falls on February 5.
Analyst DS Kim at JP Morgan Securities (Asia Pacific) Ltd said the year-on-year GGR decline for January was “well expected”, reflecting “one of the toughest comps for the year (+36 percent year-on-year in January last year); and earlier-than-usual Chinese New Year holidays (February 4 to 10), which created some lull in demand in late January.”
Mr Kim added: “Considering these, as well as the much-feared smoking ban that kicked in from January 1, 2019, January print should be viewed positively by the market.”
Up to end-2018, VIP rooms were the only places in Macau casinos that had still been allowing smoking at the gaming table. Tableside smoking ended when new rules on smoking in casinos in Macau came into full effect in the new calendar year.
Brokerage Sanford C. Bernstein Ltd agreed that January’s GGR result was “better than expected”. Analysts Vitaly Umansky, Eunice Lee and Kelsey Zhu added: “For February 2019, we are preliminarily estimating +4 percent to +7 percent year-on-year [GGR growth].”
Macau’s accumulated GGR for full-year 2018 grew by 14.0 percent compared to the tally for 2017. It marked the second straight year of GGR growth, following an increase of 19.1 percent in full-year 2017.
Before that, the Macau market had experienced three consecutive years of annual decline. In 2016, GGR fell 3.3 percent; in 2015, it slipped 34.3 percent; and in 2014, GGR declined by 2.6 percent year-on-year.
(Updated on Feb 1, 3.15pm)
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”We believe the positive stance from China towards Macau would help market sentiment in the near term despite limited short term benefit to the [casino] gross gaming revenue”
Kenneth Fong, Lok Kan Chan and Rebecca Law
Analysts at Credit Suisse