Macau July GGR hints 3 to 5 pct y-on-y fall: Credit Suisse
July gaming revenue in Macau is likely to show a decline of 3 percent to 5 percent year-on-year based on daily run rates for the first 20 days of the month and estimates for the rest of the period, says a research note from Credit Suisse (Hong Kong) Ltd.
Gross gaming revenue for July is likely to reach a maximum of MOP28.61 billion (US$3.58 billion) for the whole month, according to the Credit Suisse note.
That’s based on the bank’s estimate of average daily rates of MOP900 million to MOP950 million for the final 11 days of the month, following an aggregate of MOP18.16 billion achieved in the first 20 days.
If gambling volumes are maintained as forecast by the bank for the rest of the month, it would be the second consecutive month of year-on-year revenue decline. In July 2013, Macau generated approximately MOP29.49 billion, according to the Gaming Inspection and Coordination Bureau.
One issue exercising analysts and the investment community is whether VIP gambling numbers have started to stabilise in July.
In June, VIP revenue fell 20 percent judged year-on-year, Union Gaming Research Macau Ltd said earlier this month. The decline was despite the mass segment gaining around 30 percent in the period.
It contributed to a 3.7 percent year-on-year decline in revenue in June – the first such monthly year-on-year drop since June 2009 by GGRAsia’s calculations.
A number of theories have been advanced for that fall in the high roller market, including the impact of the FIFA World Cup soccer tournament, and continuing uncertainty amid a widely reported crackdown on corruption within mainland China.
The traditionally large volumes in the Macau high roller segment means any downward correction there can have a proportionately larger impact on the aggregate revenue numbers than similar fluctuations in the mass revenue. But in the three months to June 30, VIP’s contribution slipped to only 60 percent of all Macau gaming revenue – a new record in itself.
Morgan Stanley suggested in a research note published on Sunday – before the prior week’s unofficial GGR numbers had been circulated – that Macau’s VIP gaming market might well improve in the second half this year.
Kenneth Fong, director, equity research at Credit Suisse Hong Kong, said in his bank’s report published to clients on Monday: “Revenue has gradually recovered post [FIFA] World Cup with ADR [average daily rate] improving from MOP903 million (first two weeks) to MOP916 million last week.”
“July should post a 3 to 5 percent year-on-year decline based on the current revenue trend, implying ADR of MOP900 million to 950 million for the rest of month,” he adds.
Cameron McKnight of Wells Fargo Securities LLC in New York said in his company’s note he expected “flat to negative low single-digit year-on-year growth for July”.
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