Second-quarter growth in Macau’s VIP casino gross gaming revenue (GGR)is likely to decelerate compared to the first quarter, “partly on potential slowing VIP demand and more difficult comparison” judged year-on-year, said a Wednesday report from brokerage Sanford C. Bernstein Ltd.
It might contribute to a sequential contraction in Macau GGR in the three months to June 30, compared to the first quarter, the institution added.
“We expect to see some deceleration in second-quarter [total] GGR to +16 percent year-on-year (-3 percent quarter-on-quarter),” said the brokerage, adding that second-quarter VIP GGR might moderate to +16 percent growth year-on-year, and -4 percent contraction judged quarter-on-quarter.
“The VIP model will continue to face structural headwinds from a tightening regulatory environment and continued efforts by China to stem capital outflows,” noted the report authors, Vitaly Umansky, Zhen Gong and Cathy Huang.
“VIP GGR continued with strong growth (+22 percent year-on-year, +4 percent quarter-on-quarter) in the fourth quarter [of 2017]; January continued to exhibit strength in VIP, but we observed significant deceleration in VIP in February,” wrote the analysts.
Market-wide Macau GGR rose 5.7 percent year-on-year in February, to MOP24.30 billion (US$3.01 billion), according to data from the city’s regulator, the Gaming Inspection and Coordination Bureau, released on March 1. January GGR expanded 36.4 percent year-on-year.
Sanford Bernstein expects full first-quarter GGR for VIP and mass-market play combined to grow by 18 percent year-on-year and 3 percent quarter-on-quarter. That would in likelihood be driven by 23 percent year-on-year improvement in VIP – up 6 percent measured quarter-on-quarter – and 13 percent year-on-year expansion in mass GGR, i.e., 1 percent improvement on the first quarter, it said.
The institution raised “slightly” its estimate for full-year 2018 GGR growth to 11 percent. It said the new estimate comprised “mass year-on-year growth of 12 percent (up from 11 percent) and VIP growth of 9.5 percent year-on-year (up from 8 percent), coupled with industry-wide earnings before interest, taxation, amortisation and depreciation year-on-year growth of 13 percent (up from 10 percent)”.
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"The stronger mass growth [in Macau in the second quarter] should be viewed positively vis- à-vis [the] government’s stated priority”
Japanese brokerage Nomura