High rollers in the Macau casino market “tend to prefer” properties operated by respectively, Melco Resorts and Entertainment Ltd and Wynn Macau Ltd, suggests a new report from brokerage Sanford C. Bernstein and Co LLC.
The study, titled ‘Link to our China Consumer: Where to Play, How to Win…Premium Is the New Mainstream’, analyses a total of 23 consumer stocks “identified in the Asia premium portfolio for 2018,” said the institution.
“Higher-end customers tend to prefer Melco and Wynn, which cater to a higher-end sector (especially in [the] premium mass [segment]), or more likely, lower-end customers stay away from Wynn and Melco relative to others,” stated the report released last week.
According to Sanford Bernstein, properties operated by, respectively Melco Resorts and Wynn Macau Ltd “have the highest percentage of respondents with monthly income greater than CNY15,000 (US$29,000 annually)”.
Based on a proprietary survey’s findings published last year, Sanford Bernstein said the average Chinese customer at a Macau casino is aged 36, is more likely than not to be male, very likely lives in one of China’s most economically developed cities – known as Tier 1 or Tier 2 centres – and earns CNY19,000 (US$2,979) per month.
The brokerage had also found that “age composition of customers has a skew” for each casino brand in Macau. “SJM [Holdings Ltd] and Wynn [Macau Ltd] had an older customer skew, while Melco customers tend to be younger,” suggested the report.
The paper indicated that about 38 percent of Melco Resorts’ patrons were likely aged 21 to 29. In the case of Wynn Macau Ltd, that age bracket accounts for just 5 percent of its customers, while circa 58 percent of the casino firm’s customers are aged above 40.
The follow-up report stated: “Over the next five years, different operators may wish to employ strategies targeting provinces where age demographics (and income demographics) are more favourable to their properties.”
The authors added: “People aged 35 to 44 years are a key growth area for Macau premium players. Over the next five years, this demographic is expected to increase by 3 million people to [circa] 190 million”. The brokerage characterises “premium” mainland Chinese consumers as those earning more than CNY25,000 per month.
“In gaming, the biggest growth opportunities are likely to be focused in a relatively tight geographic scope,” said the report. “While we expect Guangdong to remain the key feeder province [to Macau’s casino industry], several other provinces will deliver significant growth as well,” added the authors.
In a separate note on Monday, Sanford Bernstein said it was raising its 2018 gross gaming revenue (GGR) year-on-year growth estimate for the Macau market to 14 percent, compared to a previous estimate of 11 percent. The new estimate comprises a17-percent growth for the mass-market segment, and a 12-percent increase in VIP gaming, said the Sanford Bernstein analysts.
Macau market’s GGR tally for the first four months of 2018 stood at nearly MOP102.24 billion (US$12.6 billion), a year-on-year expansion of 22.2 percent.
“Into mid-May, Macau has continued to surprise on the upside this year,” said the Sanford Bernstein team.
“The resilient strength in VIP has continued to surprise, but we are expecting a deceleration in VIP growth as we move into the latter part of 2018 (partly on more difficult comps),” wrote analysts Vitaly Umansky, Zhen Gong and Cathy Huang.
“Overnight visitation growth continues to support mass GGR growth (premium in particular), but same-day visitation and Chinese package tours picked up and has helped grow grind mass as well,” they added.
Sep 18, 2020The Singapore Tourism Board (STB) has announced several partnerships to support local business and boost the city’s tourism industry, amid the coronavirus pandemic. The tourism board said in a...
”Many investors cite Golden Week as a catalyst to significant, sustainable visitation increases and a showcase for profitability for many casinos [in Macau]... However… we are concerned recovery estimates may again be pushed back”
Analyst at Roth Capital Partners