DB cuts 2014 Macau revenue forecast by 2.1 points

Aug 07, 2014 Newsdesk Latest News, Macau, Top of the deck  

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Deutsche Bank AG has reduced its growth forecast for Macau casino revenue in 2014 to 6.5 percent from 8.6 percent.

Analyst Carlo Santarelli thinks VIP and mass-market revenue combined will actually decline 0.9 percent year-on-year in the third quarter, hit by a combination of a continued decline in VIP play and a slowing of the lower volume mass market.

His prediction follows what investment analysts say is a significant slowdown in the year-on-year growth of the mass market in July. That follows two consecutive months of reported double-digit percentage year-on-year decline in VIP revenue.

Telsey Advisory Group in New York estimates from unofficial industry returns that the mass market slowed to 17.3 percent year-on-year expansion in July compared to 26.9 percent in June and 32.5 percent in the whole of the second quarter. It says that even with seasonal factors and other variables that can make month-on-month comparisons challenging, it looks like something has changed.

“While the choppiness in VIP is expected at this point, the bigger disappointment is clearly the deceleration in mass market growth,” said analyst Christopher Jones of Telsey Advisory Group.

“While Telsey Advisory Group had forecasted increased volatility in the mass market growth rate coming out of our trip to Macau in early June, July’s deceleration was even a bit more than we had expected.”

Deutsche Bank analyst Mr Santarelli said in a note he expected all casino revenue in Macau to grow by only 0.3 percent year-on-year in August.

He estimated the mass-market would contribute with 14.5 percent growth in the month, but that VIP would decline by 7.8 percent.

“Our 7.8 percent VIP revenue decline estimate is predicated on a 9.0 percent year-on-year decline in VIP rolling chip volume and the LTM [last 12 months] hold [rate] of 3.12 percent (excluding direct roll),” he said.

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