GGRAsia – Macau GGR slowdown maybe greater in April than March

Macau GGR slowdown maybe greater in April than March

Apr 09, 2019 Newsdesk Latest News, Macau, Top of the deck

The rate of year-on-year slowdown in Macau casino gross gaming revenue (GGR) is likely to be higher in April than it was in March, say several brokerages. The main question they pose – citing daily GGR trends so far this month based on industry unofficial returns – is by how much.

“We estimate GGR for the month should settle at around MOP24 billion [US$2.97 billion] to MOP25 billion,” stated analysts Harry Curtis, Daniel Adam and Brian Dobson of Japanese brokerage Nomura in a Monday update based on Macau market performance in the month so far.

“Although the approximately 5.5-percent year-over-year decline at the midpoint of our estimated range implies approximately 500 basis points of deceleration versus March’s 0.4 percent year-over-year decline, we expect positive growth to resume once we lap the tough +28-percent comparison in April,” added Nomura, referring to what might happen further into the year.

The 0.4 percent year-on-year retreat in March GGR had been a better result than most sell-side analysts had been expecting.

Brokerage Sanford C. Bernstein Ltd said in its Monday note it expected Macau April GGR to be down 4 percent to 2 percent year-on-year, i.e., down 3 percent to 1 percent month-on-month.

“We expect year-on-year comparison to be difficult through [the] end of April, as GGR was very robust in early 2018, until U.S.-China trade tensions heightened,” reiterated Sanford Bernstein.

The brokerage’s analysts – Vitaly Umansky, Eunice Lee and Kelsey Zhu – said channel checks indicated that Macau GGR in the first seven days of April was about MOP5.2 billion, meaning revenue came in at the rate of about MOP742 million a day, or 13 percent down on the corresponding period last year.

The memo added: “One area of potential high-end GGR stabilisation and renewed strength may come from a recovering credit cycle in China, which may support VIP recovery in the second half.”

Improving consumer credit conditions in mainland China had been cited by Nomura in a note last month as a possible cause for optimism in the second half of 2019.

Nomura nonetheless stated in its latest note on Macau, referring to the market’s rolling chip performance so far in April: “VIP volume growth is tracking approximately 8 percent lower sequentially versus last month’s average.”