Low monthly base points in 2016 and modest year-on-year growth in 2017 compared to 2010 and 2011 suggest expansion of Macau VIP casino gross gaming revenue (GGR) is not currently “on the radar” as a matter of public policy concern for China, said a Tuesday note from analyst David Bain of Aegis Capital Corp.
“We believe VIP gross gaming revenue has been fuelled by a slightly diminishing cooling impact from mainland China’s anti-corruption campaign… new properties/high-end offerings, solid junket liquidity and new credit extension mechanisms, such as Bitcoin and new/additional players,” wrote Mr Bain.
“While China capital outflow policies could always act as a spoiler, we note that VIP trends are likely not on the ‘radar’ at current growth levels (especially when compared to calendar years 2010 and 2011 growth of +70 percent and +45 percent [respectively],” the analyst added.
Brokerage JP Morgan Securities (Asia Pacific) Ltd had said in a Monday note that based on the first 19 days of March it estimated VIP play demand had been accelerating at about 20 percent year-on-year, with the “top-three” junkets seeing demand expand at “30 percent-plus”, while the mass segment had been growing in the range of “high single-digits,” to 10 percent.
Aegis Capital’s Mr Bain stated: “There is currently an investor debate on the sustainability of the VIP rebound. While we acknowledge visibility is generally lower for VIP than for mass, we see VIP growth trends as understandable and likely to continue (though consistent channel checks will remain key).”
The institution estimated for the first quarter aggregate Macau casino GGR would expand by 10 percent year-on-year, with VIP play likely to have grown by 14 percent year-on-year in the first three months of 2017.
In a March 7 report, brokerage Sanford C. Bernstein Ltd had reiterated its February warning of a possible slowdown in Macau VIP GGR growth in the second half of 2017, due to a possible slowing in expansion of credit in the China market.
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“Amendment to the gaming law is still a work in progress ... We need to wait for further details, in terms of the finer form that the amendments will take, and there will be additional regulatory measures that will be potentially issued thereafter”
Chief operating officer of Sands China