Gaming demand in Macau casino properties appears to remain generally weak, says a note from Daiwa Securities Group Inc issued on Monday.
But the brokerage added that recent unofficial industry returns on casino gross gaming revenue (GGR) – the sort of numbers previously used by the investment community to add some hard data to these subjective observations – have “notable inconsistencies”.
Since the turn of the year, a number of brokerages covering Macau gaming have noted inconsistencies in weekly unofficial industry data. They add this makes it hard accurately to predict monthly numbers. The official monthly revenue numbers from the Gaming Inspection and Coordination Bureau are only issued retrospectively, usually on the first working day of the following month.
Daiwa analysts Jamie Soo, Adrian Chan and Jennifer Wu noted: “On the ground, we continue to observe overall weak gaming volumes across properties. At the current run rate, we continue to expect April to see a 15 percent year-on-year decline in GGR, likely reaching all-in GGR of approximately MOP16 billion [US$2.00 billion].”
Vitaly Umansky, Simon Zhang and Clifford Kurz of brokerage Sanford C. Bernstein Ltd estimated Macau’s April GGR was tracking for a decline of 11 percent to 13 percent year-on-year, based on estimated average daily revenue (ADR) for the rest of the month in the range of MOP550 million to MOP580 million.
“While April is expected to be seasonally soft, should ADR remain at this sub-optimal level, it may weigh on the gaming stocks in the near term,” the analysts said in a Monday note.
David Bain of brokerage Sterne Agee CRT said in a note that day his firm saw Macau’s run rate trends as likely to lead to a 12 percent GGR decline in April.
But he added: “While GGR could decline significantly in the days ahead of the Labour Day Holiday, May 1, [the month of] April in calendar year 2016 ends toward a weekend, potentially fortuitous timing running into the Labour Day holiday.”
A number of investment analysts note that when a Chinese public holiday abuts a weekend it can help to boost Macau GGR for that period, as visitors might be tempted either to extend a visit to Macau, or include such a visit in their holiday plans.
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"The [Macau] government has a lead in this subject in regards to what should be done after the [gaming] concessions expire. We will be first listening to what the government will say”
Ambrose So Shu Fai
Vice-chairman and chief executive at Macau casino operator SJM Holdings