GGRAsia – Macau’s April GGR beat gets mixed reception

Macau’s April GGR beat gets mixed reception

May 02, 2016 Newsdesk Latest News, Macau, Top of the deck

The year-on-year decline in Macau’s April casino gross gaming revenue (GGR) was narrower than a number of investment analysts had expected. But the disparity was more likely to be due to the difficulty financial institutions face in getting accurate advanced data on the Macau market than because of any outperformance by the market last month, said several analysts.

“Final April results were fairly wide versus the most recent Street channel-checked GGR trends and consensus estimates. This is partly a result of less in-month GGR trend transparency allowed by the new DICJ chief (sworn in December 2015),” said David Bain of brokerage Sterne Agee CRT in a note on Sunday. He was referring to Paulo Martins Chan, the director of the local regulator, the Gaming Inspection and Coordination Bureau, a body also known by its Portuguese acronym DICJ.

Official data released by the Macau government on Sunday showed casino GGR in the city declined by 9.5 percent year-on-year in April, versus the 10 percent plus decline expected by a number of investment analysts that had made estimates based on unofficial industry returns for that month.

Carlo Santarelli and Danny Valoy of Deutsche Bank Securities Inc said in a note on Sunday: “We believe the headline decline of 9.5 percent in April is likely to be interpreted as better than recent expectations, though likely reinforces investor views around weekly checks becoming less reliable.”

Grant Govertsen of Union Gaming Securities Asia Ltd stated in a Sunday note the fact April casino revenue was flat judged month-on-month was “typically” seasonal and linked with a slowdown in the market generally seen after Chinese New Year.

“April 2016 actually notably outperformed what we’ve seen on a sequential basis the last three years (2013-2015 April GGR/day was 8 percent lower than [that of] March). Put together, the stability story is clearly intact and we are expecting nice sequential growth in May and are already seeing signs of this,” said Mr Govertsen.

The Union Gaming analyst added that what he termed a “glitch” on Saturday in computer technology used in the automated clearance system at Macau’s border checkpoints was unlikely to have had much negative impact on April casino GGR. In some border checkpoints, the glitch led to delays of several hours for travellers, according to local media reports.

“Thankfully, this only had a very marginal impact on April 30 GGR as the problem happened in the evening, which is peak ‘return to China’ time,” said Mr Govertsen.

In other developments, brokerage CLSA Ltd said in a report on Friday that it was downgrading the Macau gaming sector stocks that it covered.

“Macau stocks have outperformed the market considerably in the past three months, increasing by 35 percent versus the market at 15 percent,” wrote analysts Aaron Fischer and Marcus Liu.

“We expect data points to remain lacklustre in the coming months before the opening of Wynn Palace in August. We trim our GGR estimates slightly to account for greater cannibalisation of existing properties,” they added.