GGRAsia – Analysts bullish on CNY after strong Macau Jan mass GGR

Analysts bullish on CNY after strong Macau Jan mass GGR

Feb 02, 2024 Newsdesk Latest News, Macau, Top of the deck

JP Morgan Securities (Asia Pacific) Ltd says it expects Macau’s casino sector to post gross gaming revenue (GGR) of more than MOP650 million (US$81.2 million) per day during the eight-day holiday period linked to Chinese New Year (CNY), running between February 10 and 17. That was after Macau achieved what the brokerage said was the city’s “best-ever January… when it comes to mass demand”.

GGR in Macau rose by 67.0 percent year-on-year in January to MOP19.34 billion, according to data from the city’s Gaming Inspection and Coordination Bureau released on Thursday. The January result – the second highest monthly tally pos-Covid-19 – was up 4.1 percent compared to December’s MOP18.57 billion.

The Macau regulator does not provide a breakdown of monthly GGR figures in terms of mass and VIP revenue.

The overall January GGR figure implied a 78-percent recovery rate versus the 2019 level and a daily run-rate of MOP624 million, “nearly as good as the seasonal peak month” of October 2023, with a daily run-rate ofMOP629 million, stated analysts DS Kim, Mufan Shi and Selina Li in a note on Thursday.

The JP Morgan team pointed that the January tally had been “significantly ahead” of initial forecasts, as it had happened previously with the December 2023 GGR figure. “This is two consecutive months of clean beat, tracking well above seasonality and bucking overall in trends in China consumption.”

The analysts said they estimated that mass GGR in January had “recovered to more than 110 percent of pre-Covid levels”, led by “a gradual return of base mass players”.

The brokerage forecast VIP GGR “likely stayed steady at 20-percents recovery.”

Looking into the Chinese New Year holiday period, the JP Morgan team said its checks indicated “a very healthy level (essentially a record-high quality) of gaming patrons pre-booked for comped rooms.”

Checks by GGRAsia showed that a number of Macau’s luxury hotels in casino resorts already had – as of Wednesday – no rooms available to the public for any of the nights of the upcoming lunar calendar-based Chinese New Year holiday.

China’s State Council has designated this year’s Chinese New Year holiday on the mainland as an eight-day period running from February 10, a Saturday, to February 17, also a Saturday, inclusive. The State Council said in an advisory notice, it would “encourage” mainland employers to let staff begin their break on February 9, the eve of the official festive period.

In a note also issued on Thursday, Citigroup said January’s GGR tally showed that “Mainland Chinese visitors are still able and willing to spend in Macau, so long as Macau offers them products that they like”.

The institution’s analysts George Choi and Ryan Cheung added that, reflecting the latest trends, Citigroup was raising its full-year 2024 growth forecast for Macau from an expected rise of 18 percent to a revised increase of 26 percent, to MOP231.3 billion, equivalent to 79 percent of full-2019’s GGR tally.

In regard to February’s expected performance, the analysts rose their monthly GGR forecast from MOP18.5 billion to MOP19.5 billion.

“We are anticipating GGR to moderate to around MOP567 million per day… for the first 11 days of February, reflecting the usual slowdown in volumes up to the second day of Chinese New Year [holiday period], as people tend to return home for family gathering,” wrote Mr Choi and Mr Cheung,

“We expect the run-rate to re-accelerate to around MOP900 million per day from February 12 to February 17 (the last six days of the Chinese New Year [holiday period],” they added.