Macau’s casinos might see a dip in gross gaming revenue (GGR) of between 8 percent and 12 percent in year-on-year terms this month, says Sanford C. Bernstein. In a note issued on Monday, the brokerage said its channel checks indicated Macau casinos have raked in GGR amounting to about MOP15.6 billion (US$1.93 billion) so far this month, about 8 percent less than in the corresponding period last year. The stockbroker says GGR flowed at an average rate of MOP780 million a day.
It estimates that for the week ended January 20, GGR flowed in at the rate of about MOP786 million a day, about 3 percent more slowly than in the equivalent week last year.
The Sanford Bernstein estimate for January’s GGR growth is unchanged from a prediction made earlier this month.
“GGR last week was likely impacted by the continued enforcement of the smoking ban (began enforcement on January 1, 2019) and visitation slowdown in anticipation of the Chinese New Year in early February, which will continue this week and next,” the note says.
January 1 saw the end of a 12-month grace period that had allowed tableside smoking in VIP rooms in Macau and the introduction of tougher technical standards for casino smoking lounges.
Some of Macau’s biggest casinos have been playing catch-up with the new rules and have not yet put in operation the newer smoking facilities.
Typically, a more meaningful comparison would be to compare GGR growth rates that combine data from January and February, says the Sanford Bernstein team. “We currently estimate the January and February 2019 period will be down [by] low-single-digits percent year-on-year. The January and February 2018 period saw year-on-year growth of 20 percent, setting up a difficult year-on-year comparison,” wrote analysts Vitaly Umansky, Eunice Lee and Kelsey Zhu.
The stockbroker estimates that volume in the VIP gaming market in Macau so far this month and GGR in the mass market are less than 10 percent lower than last month. It projects that the VIP market hold rate will be roughly in the normal range.
If the brokerage’s estimates reflect the true health of Macau’s gaming sector, the city will see its first year-on-year contraction in GGR since mid-2016 this month.
Most brokerages covering Macau’s casinos have suggested they expect GGR growth to contract this month. Japanese brokerage Nomura sees this month’s GGR growth falling in a range from 0 percent to 5 percent down in year-on-year terms.
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Analyst at Roth Capital Partners