The Macau casino gambling market could in 2017 register the first year-on-year positive growth in gross gaming revenue (GGR) since 2013. So said a Tuesday note from brokerage Sanford C. Bernstein Ltd.
“We maintain our view that GGR of 2017 should experience a pickup in year-on-year growth driven principally by mass-market strength,” said the memo from analysts Vitaly Umansky, Zhen Gong and Yang Xie.
The brokerage thinks such annual positive growth could amount to 8 percent; with 12 percent to 14 percent expansion in the mass gambling segment; and 2 percent to 4 percent improvement in VIP GGR.
The last time there was positive overall GGR growth in the Macau casino industry was three years ago.
In 2013, casino GGR expanded by 18.6 percent year-on-year, with most of the impetus coming from mass-market play, according to data from the local regulator, the Gaming Inspection and Coordination Bureau, also known by its Portuguese acronym DICJ.
That year, mass GGR – including that from slot machines and other electronic games – went up by 31.0 percent year-on-year, while VIP baccarat GGR improved by 13.1 percent. Because of the relative weighting in volume terms of VIP play, the general market improvement in 2013 was not as strong as the mass trend indicated.
In the subsequent three consecutive years of Macau GGR retreat – from 2014 to 2016 – contraction of the VIP segment made the biggest contribution to the overall decline of the market. During the same period, the proportion of all Macau casino GGR derived from high roller play diminished.
In 2013, VIP baccarat accounted for 66.1 percent of all casino GGR. In the nine months to September 30, 2016 – the most recent available data from the gaming bureau – VIP baccarat contributed 52.6 percent of all Macau casino GGR.
There was consecutive year-on-year positive growth in Macau monthly GGR in the final five months of 2016 confirmed the data for December and full-year 2016 released on Sunday by the city’s regulator.
Several investment analysts have now ventured to call the five-month rally in GGR a trend. Debate has continued in the investment community regarding how sustainable the rally is, against the background of tightening controls by China of money outflows from the mainland.
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"Given the opaque nature of the VIP segment (56 percent of gross gaming revenue in first quarter 2017), forecasting Macau GGR with a fair amount of certainty is difficult; therefore, we remain cautious"