The Macau gaming market had a strong start to January in casino gross gaming revenue (GGR) terms, say several brokerages quoting unofficial industry returns. Nonetheless the impact of casino hold rates is not yet clear, a number of institutions noted.
In addition, the timing of Chinese New Year – on January 28 in 2017 compared to February 8 last year – means that casino GGR for January and February this year should be combined when conducting an analysis of year-on-year performance, a selection of analysts has suggested.
Several institutions estimate that for the first eight days of January, daily casino GGR rose by as much as 30 percent compared to the daily average in the final week of December.
“The casinos in Macau have enjoyed a strong start to 2017, with… [aggregate January 1 to 8]… gaming revenue coming in at MOP6.7 billion [US$838.8 million], which implies daily average GGR of MOP838 million, up 30 percent week-on-week,” said a Monday note from Japanese brokerage Nomura.
“We believe the strength was underpinned by 1) strong [calendar] New Year holiday performance; and 2) lucky VIP win rates,” added the institution.
In their Monday memo, JP Morgan Securities (Asia Pacific) Ltd analysts DS Kim and Sean Zhuang gave the same estimate for daily GGR in the first eight days of the month.
David Katz and Brian Davis of Telsey Advisory Group Inc said in a Monday note it was not yet clear what contribution the various gambling segments – with their differentiated margins for the house – had made to the early January performance.
“A breakdown among the operators or between VIP, mass, and gaming machines is not available as of yet, and there are no indications of impact from variability in hold percentage,” noted the Telsey team.
Brokerage Sanford C. Bernstein Ltd’s analysts Vitaly Umansky, Zhen Gong and Yang Xie, said in a Monday note, regarding Macau casino GGR for January 1 to January 8 inclusive: “High VIP hold may have benefited average daily rate by 5 percent to 7 percent or more.”
A Monday advisory from Christopher Jones at the Buckingham Research Group Inc stated: “Given that Chinese New Year fell on February 8 last year, we are expecting January GGR to be especially strong, only to give way to a challenging February, given the comparisons.”
“As a result, we believe the only accurate way to view performance for the period, is combining the two months,” he added.
“Year-on-year comparisons will be particularly messy this January/February due to the calendar shift in the Chinese New Year holidays,” said JP Morgan.
Analyst David Bain of Aegis Capital Corp stated in a Monday note that his brokerage had struggled to find any correlation between Macau market performance during Chinese New Year and that of Macau casino operators’ stock.
“The ‘Chinese New Year trade’ has proven choppy the last five years,” said Mr Bain.
“We attempted to find stock correlations with the holiday, including the days and weeks before, during and afterwards – [there was] no consistency worth mentioning within the yearly period,” he added.
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VIP casino gross gaming revenue in Macau in the third quarter of 2017