Growth forecasts for gross gaming revenue (GGR) in Macau this month have been revised downwards in the wake of Typhoon Mangkhut.
Two brokerages have issued forecasts that see such expansion reduced by just a handful of percentage points compared to initial estimates for September, but in year-on-year terms, this month is still likely to see growth of up to 10 percent.
Sanford C. Bernstein Ltd says in a note issued on Monday that it expects a GGR between MOP21.9 billion (US$2.72 billion) and MOP22.3 billion, or between 3 percent and 4 percent more than a year ago. The previous forecast by the stockbroker, made in the light of the effects of Typhoon Mangkhut, was for performance ranging between zero growth and 3 percent expansion.
In another research note issued on Monday, the Instinet research arm of Japanese brokerage Nomura forecast Macau GGR this month would be about 10 percent more than a year ago. Instinet said had Typhoon Mangkhut not intervened, it would have forecast GGR this month of about MOP24 billion or MOP25 billion, roughly 15 percent more than a year ago.
The Sanford Bernstein note, written by Vitaly Umansky, Zhen Gong and Kelsey Zhu, stated the physical damage from the storm had been “immaterial” to casinos, despite the weather causing a local-government ordered shutdown of gaming operations, an industry first in the modern era of the sector.
“GGR this month had been impacted by Typhoon Mangkhut, which hit Macau during the weekend of September 15 and 16, with the closure of all casinos and disruptions to transportation in and out Macau,” the report said.
“Macau casinos had been shut down by Typhoon Mangkhut for 33 hours. The damage from the typhoon to casino properties was immaterial, but GGR was impacted as a result of the weather, casino closures and transport disruption.”
Macau’s main casino properties were all back to business as of the morning of Monday, September 17, according to GGRAsia’s own checks at the time
Sanford Bernstein said its latest forecast was based on the assumption that average daily GGR would be between MOP760 million and MOP810 million for the last seven days of this month.
Its channel checks and estimates indicated that average daily GGR so far this month was about MOP725 million.
Sanford Bernstein said Macau’s longer-term trend for GGR expansion was strong. “GGR growth over the last 18 months was boosted by a strong VIP growth trend, we continue to view the industry as a secular growth story driven relatively stronger mass growth over the longer run,” the note said.
“This dynamic has become more apparent in the second quarter, as Macau has experienced deceleration in VIP growth relative to mass as higher-end customers were more impacted by concerns around the macro China environment.”
The latter comment was a reference to China’s underlying economy. A number of analysts have noted there is typically a strong positive correlation between China’s economic performance and the fortunes of Macau GGR.
Nomura’s Instinet note estimated that average daily GGR so far this month was about MOP740 million. Instinet said its latest checks suggested volume trends recovered reasonably after the typhoon, boosted by end-of-the month demand spurred by the mid-autumn festival and recently-announced VIP room openings at MGM Cotai.
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Vitaly Umansky, Kelsey Zhu and Eunice Lee
Analysts at brokerage Sanford Bernstein