GGRAsia – Macau July GGR not as hoped, Aug maybe US$2.4bln: analysts

Macau July GGR not as hoped, Aug maybe US$2.4bln: analysts

Aug 02, 2024 Newsdesk Latest News, Macau, Top of the deck

Macau’s casino gross gaming revenue (GGR) in July was described by investment analysts as “weak” relative to market expectations, as it was likely the daily run-rate had slowed at the end of the month.

Macau’s July casino GGR rose 5.1 percent month-on-month, to just under MOP18.60 billion (US$2.31 billion), according to a Thursday announcement from the local regulator, the Gaming Inspection and Coordination Bureau.

Carlo Santarelli of Deutsche Bank Securities Inc said in a Thursday memo that the July GGR result represented an increase of 1.7 percent a day relative to June.

“The 1.7-percent sequential increase per day was 310 basis points weaker than historical trends, as the average sequential uplift in July, relative to June, over the 2013 to 2019 period, was +4.8 percent,” stated Mr Santarelli.

Vitaly Umansky, analyst at Seaport Research Partners, also observed in a Thursday note that the 5.1-percent month-on-month increase was “below the historical average – up 9 percent to 10 percent – and below expectations”.

“July started weak and ended weak, with solid mid-month performance,” stated Mr Umansky.

He added: “Visitation was averaging 95,000 per day through July 25, [a] 6.7 percent year-on-year increase; so average gaming spend per visitor improved year-on-year at a greater rate than year-on-year GGR, signifying continued premium outperformance and weakness in base mass.”

According to the Seaport analyst, average daily GGR was MOP600 million, “which was the second-weakest month this year, with June being the weakest”.

Despite a weaker-than-expected result in July, it was expected August would show sequential improvement.

Deutsche Bank forecast GGR to reach just under US$2.40 billion in August, which would represent a “monthly sequential per day increase of 3.0 percent”.

According to Mr Santarelli, the forecast “compares to the 2.1 percent average sequential per day improvement in August, relative to July, over the period from 2013 through 2019”.

In Seaport’s memo, its analyst said the institution estimates GGR in August to be circa US$2.47 billion, “a 6.7-percent increase from July,” and “above the historical average of 1 to 3 percent, and up over 15 percent from August 2023”.

“August may be a test of the strength of the recovery as both June and July had come in softer than initially expected,” wrote Mr Umansky.

“Recent crackdowns in Macau and China on money changers/money movement may have some near-term negative headwind on GGR, but we do not expect this action to be a longer-term issue,” he added. “However, this is likely to remain a limiting factor in August, and potentially into September.”

Morgan Stanley Asia Ltd analysts Praveen Choudhary and Gareth Leung said in a Thursday memo after the July data, referring secondly to China’s economic outlook: “We think July GGR could have been dragged by weaker visitation and China macros, Europe Cup [Euro 2024 football tournament] impact in the first half of July, and tighter controls on money exchange.”

(Updated Aug 2, 3.30pm)