Macau Sept GGR hints at sharp decline: analysts
Forecasts for September casino revenue in Macau are worsening both when judged year-on-year, and when the rate of year-on-year decline is judged against that seen in earlier consecutive months, indicate data in separate research notes from Credit Suisse AG and Wells Fargo Securities LLC.
Factors affecting numbers include junket liquidity remaining tight and the number of players softening, although some of that is for seasonal, weather related reasons, said one of the analysts.
Average daily casino gross gaming revenue (GGR) in Macau has dropped about 20 percent year-on-year in the first 14 days of September, Kenneth Fong and Isis Wong, Hong Kong-based analysts at Credit Suisse, wrote in Tuesday’s note.
The bank estimated GGR of MOP11.2 billion (US$1.4 billion) for the first 14 days of the month. They said it implies “an average daily revenue (ADR) of MOP800 million month-to-date, further decelerated from MOP839 million/day in the last week of August as [the] summer holiday is over and junket liquidity remains tight,” the analysts said.
Credit Suisse said its estimate factored in the slower traffic due to Typhoon Kalmaegi. Macau only raised the No. 8 storm signal on Monday night, but visitors might have avoided travelling over the weekend as news reports indicated the typhoon was moving closer to the city.
Cameron McKnight of Wells Fargo Securities also expects Macau’s gaming revenue results this month to be hurt by Typhoon Kalmaegi, which disrupted business in Hong Kong and Macau on Tuesday.
“In any case, the Chinese economy and Macau continue to remain soft, and weak growth trends into Golden Week [a national holiday coinciding with National Day on October 1] and the smoking ban may create additional uncertainty,” Mr McKnight wrote.
Credit Suisse said it expects some spillover from Golden week in the last few days of September, but that won’t be enough to prevent a “drop by 14 percent and 16 percent year-on-year to [between] MOP24.3 to MOP25.0 billion”. That would imply “ADR of MOP820-MOP860 million for the rest of September, tracking softer than consensus estimates of 5-10 percent year-on-year drop,” Mr Fong and Ms Wong wrote.
Wells Fargo’s Mr McKnight expects ADR of MOP775 million to MOP825 million for the remainder of the month. “This is equivalent to a 17 percent month-on-month decline versus historical sequential growth of -8 percent. Currently, -17 percent growth could imply -30 percent year-on-year VIP [revenue] and 10 percent mass growth,” the analyst said.
GGR for August fell by 6.1 percent year-on-year to MOP28.9 billion. A new drop in September would be the fourth consecutive month of declines in year-on-year terms.
A number of investment banks have recently forecast a bigger drop in September GGR based on the continuing VIP weakness. Japanese finance house Nomura said last week it expects GGR to fall by 6 percent to 10 percent year-on-year in September.
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