Macau casino gross gaming revenue (GGR) is likely to shrink in every month of the fourth quarter, when judged year-on-year, says banking group Morgan Stanley.
“We expect fourth-quarter 2019 revenue growth for both mass and VIP [segments] to decelerate compared to the first nine months of 2019, driven by high  base, lower [tally of] overnight visitors and general economic slowdown.” That is according to a Sunday memo from analysts Praveen Choudhary, Thomas Allen and Gareth Leung.
Morgan Stanley estimated currently that October GGR would decline by 6 percent year-on-year; that November GGR would go down by 9 percent; and December’s tally to be negative 9 percent, “amidst limited hotel room supply increase”.
The Morgan Stanley team added that the softening would be mostly driven by a combination of softening demand for VIP gambling and some moderation even in mass demand.
A number of commentators has speculated that President Xi Jinping will visit Macau in December to mark the 20th anniversary of Macau’s handover from Portuguese administration to that of China, although no announcement has been made on the topic. Some observers have noted that any visits to Macau by members of China’s senior leadership tend to depress casino play among mainland Chinese visitors, people who make up a large majority of tourists to the city.
Morgan Stanley mentioned it was “expecting mass growth to be only 6 percent” on average in fourth quarter 2019 regarding Macau market GGR.
Morgan Stanley didn’t mention specifically a possible trip by President Xi, but noted the likelihood of “potential weakness during the 20th anniversary celebration in December.”
The institution also noted regarding third-quarter earnings season – due to start this month for Macau’s six casino licensees – that third-quarter GGR market wide had been the equivalent of US$8.8 billion. representing a decline of 3 percent quarter-on-quarter, “lower than seasonal norm of +2 percent”.
Mr Choudhary and his colleagues stated: “We expect third-quarter property EBITDA to be down 1 percent, also weaker than seasonality of +8 percent quarter-on-quarter.”
But the institution added: “In terms of year-on-year growth, corporate EBITDA could rise 8 percent (better than the first quarter’s 2 percent and second quarter’s 7 percent) due to a low base last year, but luck-adjusted EBITDA should increase only 5 percent.”
The latter was a reference to house performance versus that of the players.
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"The Macau recovery continues to be disrupted by false starts, while the lack of [Chinese] public holidays for rest of the year should cap the pace of the rebound”
Andrew Lee and David Katz
Analysts at brokerage Jefferies LLC