Stockbrokers are now forecasting that gross gaming revenue (GGR) in Macau casinos will be lower in August than a year ago or, at best, just a touch higher.
Sanford C. Bernstein Ltd and the stockbroking arms of Deutsche Bank, JP Morgan and Nomura all issued on Thursday notes to investors that make forecasts for August in the light of Macau casino GGR in July.
The Macau Gaming Inspection and Coordination Bureau published that day data indicating that July GGR fell to MOP24.45 billion (US$3.03 billion), 3.5 percent less than a year earlier.
The stockbroking arm of Nomura forecasts that Macau casino GGR will be between MOP25 billion and MOP26 billion in August – that is, between 5 percent lower than a year ago, or about the same as in July 2018.
“August should mark the last of the tough comparisons in Macau,” the Nomura note said. “The about 0 percent to 5 percent year-on-year decline we estimate for August is roughly consistent with July’s minus 3.5 percent year-on-year change. However, we expect positive GGR growth to resume in September, given much easier one-year growth comps for the balance of the year.”
JP Morgan Securities (Asia Pacific) Ltd forecasts that Macau casino GGR will be between 1 percent lower and 1 percent higher in August than a year ago. The brokerage note said the forecast reflects the probability of disruption to the casino business in Macau caused by typhoons and by political unrest in the streets of the nearby city of Hong Kong, and the improbability of the casinos collecting as much revenue as they collected in August 2018, an uncommonly busy month.
The stockbroker’s forecast for August implies that Macau casino GGR will be the same in the third quarter of 2019 as a year earlier.
Deutsche Bank Securities Inc forecasts that Macau casino GGR will be 4.8 percent lower in August than a year ago. “Over the last seven years, August win per day has been about 3.1 percent stronger than the win per day in July,” it said.
“Given the July result (US$98.7 million win per day), this math would imply a win per day in August of about US$101.8 million and a full-month result of about US$3.16 billion, down 5.1 percent year on year, and a two-year stack comparison of plus 11.2 percent.”
The stockbroker now forecasts that Macau casino GGR will be 1.1 percent lower in the third quarter of 2019 than a year earlier, and that it will be 0.8 percent lower in all of 2019 than the year before.
Sanford C. Bernstein forecasts that Macau casino GGR in August will be either the same in August as a year ago, or up to 2 percent higher.
“Going into second half of 2019, we may see surprise on the upside if VIP rebounds. One area of potential high-end GGR stabilisation and renewed strength may come from a recovering credit cycle in China, which may support VIP recovery in the second half,” the Sanford C. Bernstein note said.
“Continued weakness in China macro data and tensions with US-China trade relations, however, still cast uncertainty over the GGR recovery. If a trade war sustains over an extended period, it will likely pose a headwind to China’s economy and gaming spend from China’s high-net-worth individuals in Macau.”
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Spending on purchase of goods, commissions paid and customer rebates in Macau's gaming industry in 2018