The stocks of Macau’s casino operators are at their highest level since August 2015, according to the Bloomberg Intelligence Macau China Gaming Market Competitive Peers Index. The gauge comprises the stocks of all six major casino operators in the territory.
Bloomberg said the growth was on the back of a recovery in earnings from VIP gambling, a segment that typically has lower margins than mass-market play, but can offer high volumes of business thanks to its high minimum bets.
A Friday report from brokerage Sanford C. Bernstein Ltd had said an uptick in Macau casino earnings in recent months had been supported by a recovery in the VIP segment, linked to “accelerating capital outflow from China”. But the institution added that the maintenance of such activity could not be guaranteed.
“China policy is tightening with the aim of reducing outflows, and, as a result, moving money out of the country will become more difficult, creating headwind on VIP (and upper end premium mass),” analysts Vitaly Umansky, Zhen Gong and Yang Xie had said.
The market split between VIP and mass-market play for the first quarter of 2017 has not yet been published by the local regulator, the Gaming Inspection and Coordination Bureau. But Japanese brokerage Nomura said in a Tuesday note – using data points based on unofficial industry returns – it expected Macau’s VIP segment to have expanded by 13 percent year-on-year in casino gross gaming revenue (GGR) terms in the first quarter, and the mass segment by 12 percent.
Union Gaming Securities Asia Ltd said in an April 1 note it estimated VIP revenue had expanded by at least 22 percent in March.
The Macau market is expected to continue to grow year-on-year in April. A Monday note from Nomura said that – based on average daily revenue for the first nine days of April – Macau’s casino GGR for the month was on track for year-on-year growth of between 12 percent and 17 percent, versus an average 13 percent expansion for the whole of the first quarter.
A note the same day from Sanford Bernstein said the average daily rate (ADR) of Macau’s casino GGR for the first nine days of April had been “relatively disappointing” considering the fact the period included two weekends. The brokerage said the month to date ADR was 5 percent lower than March’s ADR.
“According to our channel checks, VIP volume was down high single digit month-on-month and hold rate was generally in the normal theoretical range,” stated the institution. The brokerage however expects casino GGR in April to grow between 13 percent and 15 percent year-on-year.
Macau’s March casino GGR growth of 18 percent year-on-year represented the highest average daily revenue for the city in two years, in terms of a non-holiday period, said brokerage JP Morgan Securities (Asia Pacific) Ltd in an April 1 memo.
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”We expect Goa to quickly become a US$1 billion market as it transitions to land-based casinos (from US$150 million today), which is still just a fraction of India’s total GGR potential of US$10 billion to US$17 billion”
Analyst at Union Gaming Securities Asia