Macau’s market-wide casino gross gaming revenue (GGR) is likely to grow by up to 12 percent in year-on-year terms in 2018, says research firm S&P Global Market Intelligence Inc, a unit of ratings agency S&P Global Inc.
“We expect continued GGR growth in Macau, though at a tamer clip,” stated the research report issued on Tuesday. “We expect mass-market GGR to increase 5 percent to 10 percent and VIP GGR … to rise by less than 15 percent in 2018. This should support total Macau GGR growth of 6 percent to 12 percent this year,” it added.
Last week, banking group Morgan Stanley increased its 2018 Macau GGR growth estimate to 16 percent year-on-year, from 11 percent forecast previously.
Casino GGR in Macau’s VIP segment expanded by 26.7 percent year-on-year in full-year 2017, while mass-market revenue for the period was up 10.4 percent, according to official data.
The ratings agency research unit noted that stabilising economic growth in China, the opening of new casinos in Macau, and ongoing infrastructure improvements in the city, should “continue to fuel growth in Macau’s GGR” in 2018.
MGM Cotai, a property developed by Macau-based casino operator MGM China Holdings Ltd, is to open on January 29, adding new-to-market gaming tables and approximately 1,400 hotel rooms to the Macau market. Such inventory is expected “to drive further demand” in the local sector, said the report.
The market intelligence unit nevertheless expected “continued high volatility in Macau GGR, given the market’s susceptibility to policy changes, economic conditions, and pronounced seasonality”.
“Further curbs on capital outflows and money-laundering, a refreshed crackdown on corruption, or a tightening of regulations on junket operators by the Macau government all constitute risks that could materially weaken Macau gaming revenue growth over the next 12 months,” added the institution.
The research firm additionally said that despite the stronger financial buffers and continued revenue momentum for casino operators with exposure to the Macau market, it does not expect “many upgrades over the next 12 months”, as the institution’s credit profiles already incorporate “the high cash flow volatility intrinsic to the [gaming] industry, and likely increasing distributions to shareholders”.
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Analyst at Roth Capital Partners