Casino gross gaming revenue (GGR) in Macau for March is likely at best to be flat judged year-on-year, and at worst, down by 5 percent compared to a year earlier. That is the scenario presented overall by two brokerages in memos to investors in Macau gaming stocks.
A Monday note published by Instinet – the stockbroking arm of Japan’s Nomura banking and investment group – suggested that Macau’s March GGR would be either “flat”, or down by as much as “5 percent year-on-year”, a deterioration of performance compared to earlier forecasts of growth in a range somewhere between flat and up 5 percent.
“Factoring in the somewhat lower-than-expected weekly GGR numbers month-to-date, we now expect the sequential lift in March (from February) to be slightly lower than its historical average of up low-single-digit sequentially,” wrote analysts Harry Curtis, Daniel Adam and Brian Dobson in Nomura’s Monday note.
Measured by gaming segment, the Nomura analysts estimated that average daily mass-market revenues in Macau this month were about “6 percent to 7 percent” lower than the average in February, with VIP volume growth tracking about “13 percent to 14 percent” lower sequentially versus last month’s average.
“Assuming GGR per day settles at approximately MOP800 million (US$98.78 million) to MOP850 million for the remaining two weeks of the month, we now estimate March GGR will be around flat to down 5 percent year-on-year,” the Nomura note said.
Sanford Bernstein estimated the GGR average daily rate during the week of March 11 to March 17 as MOP742 million, while Nomura estimated it was MOP743 million.
Sanford Bernstein said its channel checks indicated that aggregate GGR so far in March was about MOP13.8 billion, representing an daily average rate of about MOP811 million. That would represent a decline of 3 percent on the average daily rate achieved in March 2018. In the month to date, the average daily rate of GGR was down 10 percent compared to February’s average daily rate, suggested the institution.
For March, Sanford Bernstein said it was lowering its March GGR performance estimate to “-5 percent to -3 percent year-on-year”.
Referring to the first three months of the year taken as a whole, Sanford Bernstein analysts Vitaly Umansky, Eunice Lee and Kelsey Zhu wrote in their Monday note that a smoking ban – that became active from January -might continue to have a negative affect on gaming revenue. The ban was a reference to the end – from January 1 onward – of a previous grace period for tableside smoking in Macau VIP rooms.
The Sanford Bernstein team added: “We expect year-on-year comparison to be difficult through end of April, as GGR was very robust in early 2018 until U.S.-China trade tensions heightened beginning last summer.”
If March casino GGR sees a decline as forecast, it would be the second time this year that the city would have seen a year-on-year decline in its monthly gaming revenue.
Macau’s February GGR stood at MOP25.37 billion, up by 4.4 percent year-on-year. The market’s accumulated 2019 year-on-year performance to February 28 represented a GGR decline of 0.5 percent year-on-year, i.e., aggregate GGR of MOP50.31 billion. January casino GGR registered the first year-on-year monthly decline since 2016.
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"The protests in Hong Kong may have caused some transport disruption and created a headwind to China visitation into Hong Kong (and onward visitation into Macau), but we believe the impact on GGR from the Hong Kong protests has been more minor"
Vitaly Umansky, Eunice Lee and Kelsey Zhu
Analysts at brokerage Sanford Bernstein