Macau’s casino gross gaming revenue (GGR) growth trend remains “solid” this month, despite the slowdown seen in May, say several investment analysts, citing estimates based on unofficial industry returns. The GGR growth expected for June is likely to be supported by an uptick in revenue in the mass-market segment, they added.
“Based on our checks, gross gaming revenue (GGR) for the first 10 days of June was estimated at circa MOP8.5 billion [US$1.05 billion], translating into [about] MOP850 million per day,” said JP Morgan Securities (Asia) Ltd analysts DS Kim and Sean Zhuang.
“This is better than May’s MOP822 million per day (which was dragged by poor VIP luck), helped by two full weekends during the 10-day period,” they wrote in a Monday memo.
Casino GGR in Macau rose by 12.1 percent year-on-year in May, to nearly MOP25.49 billion, according to official data. Last month’s result was a moderation on the 27.6 percent year-on-year expansion witnessed in April.
The JP Morgan team stated that the brokerage’s own checks indicate that “mass demand seems to be tracking strongly, up modestly month-on-month or over 20 percent year-on-year, showing no sign of slowdown despite the recent UnionPay issue”.
The latter was a reference to an apparent crackdown – reported last week – on use of China UnionPay Ltd point-of-sale (POS) machines in pawnshops or jewellery shops based inside Macau casino premise.
In Monday’s note, JP Morgan’s Mr Kim and Mr Zhuang said additionally, regarding June GGR trends: “VIP volumes have fallen modestly month-on-month, which is within the typical volatility; and major junkets have had fairly normal luck factor month-to-date, having recovered from poor luck in May.”
Japanese brokerage Nomura also suggested in a Monday note that the reported “crackdown” efforts on UnionPay terminals “have had little (if any) near-term impact on overall demand … as evidenced by last week’s strong GGR number”.
“By segment, month-to-date we estimate that average daily VIP volume is [about] 3 percent lower sequentially versus the average in May, VIP hold percentage is [circa] 2.85 percent (versus the “normalised” hold range of 2.7 percent to 3.0 percent), and mass GGR/day is tracking [circa] 2 percent to 3 percent higher versus May,” said analysts Harry Curtis, Daniel Adam and Brian Dobson.
The Nomura team said additionally that assuming June GGR slows sequentially “in line with the trailing six-year median”, the brokerage’s GGR estimate for the month would be around MOP22 billion to MOP24 billion, representing a 10-percent to 20-percent year-on-year growth.
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“We see that basically the ‘golden’ periods [for Macau's casino industry] are all concentrated in the second half of this year”
Lei Wai Nong
Macau’s Secretary for Economy and Finance