Market-wide Macau casino gross gaming revenue (GGR) growth – as measured in year-on-year terms – is likely to slow down for a second consecutive month in September, say several brokerages.
The monthly GGR tally is tracking for an increase of between 14 percent to 18 percent year-on-year, say investment analysts.
City-wide GGR growth in July stood at 29.2 percent year-on-year, according to official data from the local casino regulator, the Gaming Inspection and Coordination Bureau. That was the highest annual growth rate recorded so far in 2017.
In August, year-on-year GGR growth declined to 20.4 percent. According to several investment analysts, the GGR tally for August might have been higher but for the disruption caused to the city late in the month by an exceptionally powerful typhoon. Following Typhoon Hato on August 23 – which brought with it winds of more than 200 kilometres per hour (124 mph) – some hotels and casino resorts temporarily suspended their operations for up to one month, as they sustained damage and suffered power cuts and interruption to water supply.
For the eight months to August 31, GGR expansion stood at 19.1 percent year-on-year.
“We expect slower year-on-year growth in September versus +20 percent in August, given tougher year-on-year comparisons with the opening of Wynn Palace on August 22 last year,” said Japanese brokerage Nomura in a note on Monday. That was a reference to the opening of casino resort Wynn Palace in Macau’s Cotai district by Wynn Macau Ltd in late August 2016.
The Nomura note added: “Assuming sequential growth for the rest of the month in line with the trailing five-year average for September…, we estimate year-on-year growth will be around 15 percent.”
The Nomura team of analysts said it was bullish on such growth based on “a recovery in post-typhoon [Hato] demand” for gaming services. “We don’t expect GGR growth to slow meaningfully ahead of Golden Week… consistent with prior years,” it added.
China’s State Council has designated October 1 to 8 as a holiday period to mark China’s National Day on October 1 and the Mid-Autumn Festival, which this year falls on October 4. The festive period – a peak season for Macau’s gaming industry – is commonly known in China as ‘Golden Week’.
Nomura stated in its Monday note that it expected “decelerating monthly growth trends” for market wide GGR in Macau to continue for the balance of 2017 given the tough year-on-year comparisons in the fourth quarter.
Brokerage Sanford C. Bernstein Ltd said in a Monday memo that it estimates Macau’s September GGR will be in the range of MOP21.0 billion (US$2.61 billion) and MOP21.2 billion, an increase of between 14 percent and 15 percent from the prior-year period.
“Our channel checks indicate that Macau’s GGR month-to-date (September 1-24) was around MOP17 billion, an average daily rate of MOP708 million,” Sanford Bernstein analysts Vitaly Umansky, Zhen Gong and Cathy Huang wrote.
Also in a Monday memo, Telsey Advisory Group LLC said it anticipated a GGR growth rate of between 16 percent to 18 percent at current run rates for the month of September.
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”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