Macau is likely to post in February a monthly gross gaming revenue (GGR) increase of no more than 15 percent as measured in year-on-year terms, say several analysts. That would represent a sharp slowdown from the 36.4 percent growth rate recorded in January.
“Based on our checks, GGR for the first 19 days of February was MOP13.5 billion [US$1.68 billion], implying a MOP710 million/day run rate, versus MOP847 million/day in January,” JP Morgan Securities (Asia Pacific) Ltd wrote in a Tuesday note. Based on that data, the brokerage said it expected full-month GGR to grow between 8 percent and 10 percent, compared to its previous growth forecast in the range of 11 percent to 13 percent.
“GGR in the past eight days only came in at around MOP640 million/day, despite it including the first five days of the seven-day Chinese New Year holidays (February 15-21),” JP Morgan analysts DS Kim and Sean Zhuang stated.
They added: “The print is admittedly disappointing given elevated expectations from record visitor numbers and strong hotel bookings, but recall also that it captured the pre-holiday slowdown, and that the first couple days of Chinese New Year holidays are seasonally weak anyway (given family gatherings etc.).”
The total number of tourist arrivals to Macau from February 15 to February 19 inclusive rose by 9.2 percent compared to the equivalent period of Chinese New Year in 2017. The total tally stood at around 485,000, according to figures reported by the Macao Government Tourism Office.
Japanese brokerage Nomura said in a note issued also on Tuesday it expected “a spike” in gaming demand in the last week of February.
“GGR/day typically increases around 5 percent to 10 percent for the combined January-February period versus December… However, we expect above-average growth this month, given the February 13 opening of MGM Cotai,” said analysts Harry Curtis, Daniel Adam and Brian Dobson.
They added: “Assuming GGR/day for the combined January-February period lifts closer to 15 percent to 20 percent sequentially versus December, we estimate daily GGR will be around MOP900 million to MOP950 million in February, or up roughly 10 percent to 15 percent year-on-year.”
Investment analysts often prefer to combine the months of January and February when reviewing the performance of Macau’s gaming industry, in light of the impact of Chinese New Year on the sector. The holiday is a movable celebration, dictated by the lunar cycle, which can fall anytime between January and February.
The Chinese New Year period is usually a peak season for Macau’s gaming industry as hundreds of thousands of mainland Chinese tourists take advantage of the week-long break to visit the city.
Brokerage Sanford C. Bernstein Ltd said in a Tuesday note that “last week’s GGR in Macau was disappointing”. It added it was now forecasting a year-on-year GGR increase of between 0 percent and 8 percent for February, below its prior estimates of between 12 percent and 16 percent.
Analysts Vitaly Umansky, Zhen Gong and Cathy Huang stated: “While visitation was robust during the first few days of the long holiday, many large players in both VIP and premium mass have stayed away (as is sometimes the case). If the remaining nine days of the month are weaker than we expect, February can easily wind up being year-on-year negative.”
