GGRAsia – Macau VIP sector back to y-o-y growth in 4Q: JP Morgan

Macau VIP sector back to y-o-y growth in 4Q: JP Morgan

Jan 04, 2017 Newsdesk Latest News, Macau, Top of the deck

Macau’s VIP gaming sector is likely to have posted its first year-on-year quarterly growth in almost three years in the quarter ended December 31. That is according to a Monday note from JP Morgan Securities (Asia Pacific) Ltd.

Analysts DS Kim and Sean Zhuang wrote that casino VIP gross gaming revenue (GGR) in the fourth quarter of 2016 was US$3.5 billion. “We estimate VIP GGR grew by 15 percent to 16 percent quarter-on-quarter or 8 percent to 9 percent year-on-year [in the fourth quarter of 2016],” they added.

Data compiled by Macau’s casino regulator, the Gaming Inspection and Coordination Bureau, shows that the last time quarterly VIP baccarat GGR increased in year-on-year terms was in the first quarter of 2014.

JP Morgan estimated in its Monday note that full-year VIP GGR in Macau declined by 12 percent in 2016, while mass-market revenue went up by 6 percent. Both segments posted double-digit declines in 2015, with VIP revenue down by about 40 percent, according to data from the city’s regulator.

Macau’s accumulated casino GGR for full-year 2016 fell 3.3 percent compared to the tally for 2015, according to data released on Sunday by the Gaming Inspection and Coordination Bureau. The official breakdown for VIP versus mass-market table gambling in the fourth quarter and for full-year 2016 will be released later this month.

Analysts Mr Kim and Mr Zhuang had said in a memo on December 1, regarding the positive outlook for the Macau VIP segment: “In our view, this is driven by a combination of better [China] macro backdrop (e.g. property price rally, coal/steel price hikes, higher producer price index, etc.), improved player confidence (e.g. less intense [China] anti-graft campaign); better junket liquidity and recent new [Macau casino] openings.”

Brokerage Sanford C. Bernstein Ltd stated in a Tuesday note that Macau’s casino gambling market could in 2017 register the first year-on-year positive growth in GGR since 2013. Analysts Vitaly Umansky, Zhen Gong and Yang Xie forecast overall growth could amount to 8 percent, with 12 percent to 14 percent expansion in the mass gambling segment, and 2 percent to 4 percent improvement in VIP GGR.

Spectrum Gaming Group LLC, a research and consulting firm covering the casino gaming industry, said in December that VIP play in Macau would in 2017 “decline to less than 50 percent of GGR for the first time since Macau reverted back to China” in 1999.

According to official market data issued by the Macau casino regulator in October, the VIP segment in the third quarter of 2016 represented 52 percent of all GGR generated by casino games.

Brokerage Union Gaming Securities Asia Ltd however has suggested that VIP casino GGR accounted for only 44 percent of the gambling market in the three months to September 30, based on numbers released for the third-quarter earnings of Macau’s six gaming operators.