GGRAsia – Macau GGR at US$1.5bln in first 24 days of Sept: JP Morgan

Macau GGR at US$1.5bln in first 24 days of Sept: JP Morgan

Sep 26, 2023 Newsdesk Latest News, Macau, Top of the deck

Market-wide casino gross gaming revenue (GGR) in Macau reached MOP12.0 billion (US$1.49 billion) in the first 24 days of September, or a daily run-rate of MOP500 million, according to estimates from JP Morgan Securities (Asia Pacific) Ltd.

“This implies that last week’s run-rate has actually edged up further week-on-week to between MOP550 million and MOP560 million per day, from MOP540 million to MOP550 million a week ago (or MOP430 million in the first two weeks of September amidst extreme weather),” stated the brokerage in a Monday note.

“This is well within expectations, allowing us to keep modelling MOP14.5 billion to MOP15.0 billion GGR (or MOP480 million to MOP500 million per day) for September,” wrote analysts DS Kim, Mufan Shi and Selina Li.

Macau recorded casino GGR of MOP17.21 billion in August, up 3.3 percent from July, according to an announcement from the local regulator, the Gaming Inspection and Coordination Bureau. It was the best monthly performance since January 2020, at the very beginning of the Covid-19 pandemic, when GGR stood at MOP22.13 billion.

The JP Morgan team also said in its Monday memo that its “checks with gaming hosts indicate a pretty upbeat sentiment” for the October Golden Week period, “with most expecting Golden Week to print the highest GGR” since Macau’s post-Covid-19 full reopening to tourists.

They added: “We continue to expect industry mass GGR to hit 100 percent-plus of pre-Covid-19 levels for October Golden Week.”

China’s State Council has designated September 29 to October 6 inclusive this year as the holiday period popularly known as either autumn or October Golden Week. This year, the period encompasses the lunar-calendar based Mid-Autumn Festival, falling on September 29, and China’s National Day on October 1.

Macau’s tourism authority expects the city to welcome a daily average of “over 100,000” visitor arrivals during the period.

In its latest note, the JP Morgan team also alluded to the fact that the share price of Macau casino operators listed in the Hong Kong Stock Exchange had fallen between 2 percent and 7 percent on Monday.

The analysts said some investors had showed concern following an article by GGRAsia on the potential criminalisation of unlicensed money exchange in Macau.

“Many are asking us on GGRAsia’s article,” the brokerage wrote. It stressed that the story was a collection of views from different experts on the topic, following comments from Macau’s Secretary for Security earlier this month. At the time, Wong Sio Chak mentioned the city’s authorities were considering the actual criminalisation of unlicensed money changing, due to concerns about exchange touts lurking in or near casinos.

The JP Morgan team added that it forecast the impact from a potential criminalisation of unlicensed money exchange in Macau “may not be big”.

It said: “First, we believe anyone who provides or uses illicit foreign exchange services is well-aware that such activities are not legal, so it all boils down to ‘how severe the actual crackdown is’, almost regardless of whether it’s a crime or contravention.

“Second, we think these illicit exchanges on or around casino floors target a very specific and niche cohort of players (typically the low and mid-end players who urgently need extra cash to extend the play), hence the impact should be relatively limited – our best guess is less than 10 percent of total GGR is using these services.”

Third, it added, “demand could move to other areas of loopholes (pawnshop using UnionPay cash-back scheme, underground banks, etc.) and mitigate the impact, unless the illicit/greychannels are completely eradicated.”