GGRAsia – Analysts at odds on Macau Feb GGR forecasts

Analysts at odds on Macau Feb GGR forecasts

Feb 02, 2018 Newsdesk Latest News, Macau, Top of the deck

Investment analysts covering the gaming sector are posting very different forecasts for Macau’s casino gross gaming revenue (GGR) in February. While Japanese brokerage Nomura and investment bank Morgan Stanley Asia Ltd are suggesting year-on-year GGR growth rates in the mid-teens, Deutsche Bank Securities Inc is forecasting an increase of less than 3.0 percent.

Casino GGR in Macau rose by 36.4 percent year-on-year in January to MOP26.26 billion (US$3.26 billion), according to data from the city’s Gaming Inspection and Coordination Bureau released on Thursday.

“We expect daily GGR of approximately MOP950 million to MOP955 million for February, or up around 15 percent,” Nomura wrote in a Thursday note.

“We expect above-average growth in February this year, given the expected opening of MGM Cotai mid-month,” added the brokerage.

That was a reference to the HKD27-billion (US$3.45-billion) casino resort that Macau-based gaming operator MGM China Holdings Ltd is developing in the Cotai district.

MGM China said late last month that the opening of the Cotai property had been delayed to February. The firm had said previously that the property was scheduled to open on January 29, with a “grand opening” to take place on February 13. The exact new opening date has not yet been confirmed by the casino operator.

Investment bank Morgan Stanley posted also on Thursday a slightly more bullish forecast for Macau’s February GGR than that of Nomura.

“We estimate February GGR growth to remain strong at 16 percent year-on-year as our survey suggested high visitation from strong hotel bookings and rising rates for most hotels during the upcoming Chinese New Year holiday (February 15 to 21),” Morgan Stanley analysts Praveen Choudhary and Jeremy An wrote.

They added: “We expect 16 percent year-on-year total GGR growth for 2018 and 19 percent year-on-year for the first quarter of 2018, driven by visitation growth potential from lower tier [mainland China] cities, new supply (MGM Cotai and Morpheus) and infrastructure improvement.”

Morpheus is a new US$1-billion hotel tower for City of Dreams Macau – a property under Melco Resorts and Entertainment Ltd – due to open in the first half of 2018. The new hotel will feature approximately 780 hotel rooms, suites and villas.

Analysts at Deutsche Bank are however forecasting a much slower growth rate for Macau’s GGR in February than its peers.

Analysts Carlo Santarelli and Danny Valoy said in a note also issued on Thursday: “While Chinese New Year generates a lot of hype, the month around the holiday has often tended to bring about disappointment as the periods into and post the holiday tend to offset the primarily mass strength during the holiday.”

“At present, we are forecasting +18.1 percent growth year-on-year for the January/February period. Our February estimate stands at +2.8 percent,” they added.