Investment analysts covering the Macau gaming sector expect casino gross gaming revenue (GGR) to increase between 2 percent to 5 percent year-on-year in July, following on from two consecutive months of growth that snapped a period of mild decline.
Japanese brokerage Nomura said in a Monday memo that the accelerating GGR growth in June and the United States-China trade truce that was announced over the weekend “should be viewed as strong positives for the Macau gaming stocks”.
Casino GGR in Macau rose by 5.9 percent year-on-year in June, to just above MOP23.81 billion (US$2.96 billion), according to data released on Monday by the city’s regulator, the Gaming Inspection and Coordination Bureau. It was the best monthly growth so far this year and beat the market’s expectations.
“Assuming July increases sequentially in line with its trailing seven-year average … we estimate GGR for the month will settle around MOP26 billion to MOP27 billion,” wrote Nomura analysts Harry Curtis, Daniel Adam and Brian Dobson.
“Our +5 percent growth estimate for July, while roughly in line with June’s 5.9 percent number, implies roughly 500 basis points of acceleration versus circa 0 percent year-to-date,” said the Nomura team. “We expect improved growth for the balance of the year, given relatively easier one-year growth comparisons,” it added.
June’s average daily revenue was about MOP794 million, according to official data. Deutsche Bank Securities Inc said in a Monday note that over the last seven years, “July win per day has been [about] 5.2 percent stronger than the win per day in June”.
“Given the June result (US$99.3 million win per day), this math would imply a win per day in July of [circa] US$104.5 million and a full month result of [about] US$3.239 billion, up 2.2 percent year-on-year, and a two-year stack comparison of +12.7 percent,” said analysts Carlo Santarelli, Steven Pizzella and Brian Mullan.
“Given the modestly favourable calendar impact in June, our forecast for July is +1.8 percent year-on-year,” they added.
JP Morgan Securities (Asia Pacific) Ltd said in a Monday report that it expected July and August GGR to grow between 2 percent to 3 percent year-on-year, followed by high-single-digit growth in September.
Analyst DS Kim added: “This implies GGR could print positive growth in the second half of 2019 …, in turn suggesting upside risks to our fiscal year 2019 estimate GGR forecast of -1 percent (where we have -15 percent in VIP and +12 percent in mass).”
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DS Kim, Amanda Cheng and Livy Lyu
Analysts at brokerage JP Morgan Securities (Asia Pacific)