Macau January GGR strong so far: analysts
Macau’s casino gross gaming revenue (GGR) for the first 12 days of January was estimated at circa MOP10.3 billion (US$1.29 billion), suggested JP Morgan Securities (Asia Pacific) Ltd in a Monday memo.
“While year-on-year comparison is difficult due to a calendar shift in Chinese New Year holidays, this is undoubtedly a robust number for a non-holiday period and better than what we and the market expected,” said analysts DS Kim, Derek Choi and Jeremy An.
The Chinese New Year holiday period – which typically sees a spike in gambling in Macau – started on February 5 last year. China’s State Council has declared Friday, January 24, to Thursday, January 30, inclusive, as a public holiday period in mainland China for the upcoming Chinese New Year.
The JP Morgan team said it believed both the VIP and the mass-market segment “showed solid recovery” from recent months, with mass GGR up around 10 percent year-on-year, while VIP volumes “dropping ‘only’ low/mid-teens … despite strong VIP win rate (3.5 percent+ for major junkets).”
The analysts said that in addition to a “much” easier growth comparison in year-on-year terms, January’s improved performance might also reflect the “pent-up demand” in the aftermath of a three-day December visit to the city by China’s President Xi Jinping, “as temporary visa/travel restrictions were lifted after President Xi’s visit (which we confirmed with various immigration offices).”
Despite the better-than-expected performance, JP Morgan said it was keeping its January casino GGR assumptions unchanged at -2 percent year-on-year, “assuming a sharp pre-holiday slow-down for the next two weeks,” as the peak demand for Chinese New Year holiday period is expected to only from January 27.
Typically gaming revenues decline in the weeks leading up to the Chinese New Year holiday period, according to analysts.
“That said, given strong month-to-date trends and seemingly solid Chinese New Year booking, we wouldn’t be surprised to see January printing flat or even marginally positive growth in GGR,” said the JP Morgan analysts.
Brokerage Sanford C. Bernstein Ltd said in a Monday memo that the estimated month-to-date average daily rate of MOP885 million in January was +7 percent year-on-year compared with the prior-year period, and 16 percent higher month-on-month.
But the calendar shift for Chinese New Year makes the monthly comparison “less meaningful,” stated analysts Vitaly Umansky, Eunice Lee and Kelsey. “For January/February combined, we currently estimate -1 percent to +2 percent year-on-year,” they added.
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