Macau is likely to report in August its second lowest monthly gross gaming revenue (GGR) tally since end-2010.
Forecasts by several analysts based on unofficial industry returns for the first 16 days of the month suggest that GGR for the whole of August will be between MOP17.5 billion (US$2.2 billion) and MOP18.4 billion. That would mean a decline of 36 percent to 39 percent in year-on-year terms.
Aside from June 2015 – when monthly GGR in Macau stood at MOP17.4 billion – the last time the city’s casino industry delivered a monthly GGR tally below MOP18.5 billion was in November 2010.
“We believe low hold rate has impacted revenue so far this month, but the underlying trends remain quite lacklustre,” UBS Securities Asia Ltd analysts Anthony Wong and Angus Chan wrote in a note released on Monday.
The two analysts noted that a poor GGR performance in August might lead the Macau government to introduce previously flagged austerity measures to control spending. The local authorities have said that if the city’s average monthly GGR drops below the MOP20-billion threshold used to prepare the revised 2015 budget, cost-cutting measures would be introduced. The government has yet to detail where such cuts might be made.
In the first seven months of 2015, Macau’s accumulated GGR stood at MOP140.3 billion, or a monthly average of MOP20.04 billion, according to official data from the city’s casino regulator.
“For the full month of August, we expect GGR at MOP17.5 billion to MOP18.4 billion, or down 36 percent to 39 percent year-on-year, compared to -35 percent year-on-year in July,” Mr Wong and Mr Chan stated. “At the high end of our estimates, year-to-date monthly GGR would be around MOP19.8 billion, below the MOP20-billion per month threshold that the Macau government has set for its budget, and should trigger some spending cuts at the local government.”
The UBS analysts added that the VIP gaming segment continues to be weak. “Based on our checks with industry participants, we believe junket room closures will continue into the third quarter, with recent/planned closures of at least four rooms at properties including Four Seasons, Galaxy Macau and Wynn [Macau].”
Wells Fargo Securities LLC now expects Macau’s August GGR to decline between 36 percent and 38 percent in year-on-year terms, following the latest unofficial industry figures. “We are assuming roughly MOP585 million to MOP615 million [for average daily revenue] for the remaining weeks in August,” analyst Cameron McKnight wrote in a note on Monday.
Brokerage Sanford C. Bernstein Ltd’s estimate points to a GGR decrease of 37 percent year-on-year in August. “Our industry channel check indicates that Macau GGR for the month through August 16 was MOP9.2 billion,” stated analysts Vitaly Umansky, Simon Zhang and Bo Wen. “Last week’s average daily revenue was MOP586 million, marginally higher than the previous week’s average daily revenue of MOP567 million,” they added.
“That August 2015 is now on track for a 6 percent month-on-month decline seems to indicate a full demand recovery that some are hoping for is yet to be seen,” observed analysts Richard Huang and Stella Xing from Japanese brokerage Nomura in their Tuesday note.
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"The MSAR [Macau Special Administrative Region] Government is always maintaining its policy not to have imported labour to work as dealers. This position has not changed"
Lionel Leong Vai Tac
Macau’s Secretary for Economy and Finance