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Macau Sept GGR fall to be smallest y-o-y since Jan: analysts

Sep 15, 2015 Newsdesk Latest News, Macau, Top of the deck  


Macau Sept GGR fall to be smallest y-o-y since Jan: analysts

Macau’s casino sector is likely to post in September its smallest monthly gross gaming revenue (GGR) decline as measured in year-on-year terms since January. But, according to several analysts, GGR is still poised to retreat by at least 27 percent from the prior-year period.

“Our industry channel checks indicate that Macau GGR for the month through September 13 was MOP8.35 billion [US$1.05 billion],” said brokerage Sanford C. Bernstein Ltd in a note issued from Hong Kong on Monday.

“Assuming average daily revenue of MOP600 million for the remainder of this month, we estimate September GGR to be MOP18.6 billion, representing a year-on-year decline of 27 percent,” said the brokerage’s analysts Vitaly Umansky, Simon Zhang and Bo Wen.

Macau posted a year-on-year casino GGR decline of 17.4 percent in January. Since then, monthly GGR had dropped by percentages ranging from 34.5 percent (July) to 48.6 percent (February) measured in year-on-year terms.

The projected improved year-on-year GGR performance in September is not a result of a sharp rebound in revenue but of easier year-on-year comparisons. Macau’s casino industry has been posting monthly year-on-year declines since June 2014. But it was in September 2014 that the first double-digit decrease – of 11.7 percent – was recorded.

If Sanford Bernstein’s GGR estimate for September proves correct, that would be the third consecutive month that Macau’s casino industry produced gross revenue of precisely MOP18.6 billion.

Sterne Agee CRT analyst David Bain stated in a Monday note – also based on unofficial industry returns for the first 13 days of September – that Macau is likely to post in September a year-on-year GGR decline of between 29 percent and 35 percent.

Wells Fargo Securities LLC is now expecting GGR for September to retreat by between 29 percent and 33 percent in year-on-year terms, versus a prior estimate of a decrease of 30 percent to 36 percent. But analyst Cameron McKnight cautioned in a Monday communication to investors: “We note that weekly numbers have been noticeably volatile since early June and expect this pattern to continue given inherent instability in the VIP segment.”

“We continue to expect September’s total GGR to see a decline of 28 percent to 31 percent year-on-year,” Daiwa Securities Group Inc stated.

“A number of junket closures we have identified have progressively vacated… VIP spaces in the respective properties, which we believe will continue to have a contagion negative impact on the VIP sector as a whole,” analysts Jamie Soo, Adrian Chan and Jennifer Wu wrote on Monday.

Macau’s casino industry has been rocked over the past few days by news that junket operator Dore Entertainment Group Ltd has been a victim of internal fraud by a former employee. The junket operator has not confirmed the amount of money involved in the case, but investment analysts have mentioned figures between HKD200 million and HKD2 billion.

While industry observers say the Dore case’s direct impact on the Macau VIP sector is limited, some have highlighted risks of contagion related to concerns among agents and junket investors about capital liquidity in the junket sector.


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