Jan 07, 2019 Newsdesk Latest News, Macau, Top of the deck  
Morgan Stanley is forecasting that overall gross gaming revenue in Macau casinos will shrink by 2 percent this year. A note issued on Sunday by the stockbroking arm of the investment bank says its analysts think the earnings of Macau casino operators may decline in the first quarter.
“The negative revisions mean more downside to stocks despite cheap valuations,” said the note written by Praveen Choudhary, Jeremy An and Thomas Allen.
The Macau gaming shares preferred by Morgan Stanley are those of MGM China Holdings Ltd and Melco Resorts and Entertainment Ltd.
“While Macau is a structural growth story driven by low penetration and improving infrastructure, we see the cyclical slowdown continuing in 2019,” the note said. “We change our industry view to ‘in-line’ from ‘attractive’ due to tightened liquidity, [the] full smoking ban pressuring VIP and premium mass growth in 2019, and potential decline in earnings before interest, tax, depreciation and amortisation year-on-year growth in the first quarter of 2019.”
A revised bill on smoking that bans tableside tobacco use in VIP rooms – the only places in the Macau casino context that were still allowing smoking at the gaming table – came into effect on January 1. A December report on the casino sector outlook for Macau from brokerage Sanford C. Bernstein Ltd said the new smoking rules were “likely a headwind for the industry”.
“We now expect 2019 GGR growth of minus 2 percent (was 5 percent), driven by negative VIP growth of minus 6 percent (was 0 percent) and slower mass growth of 2 percent (was 9 percent),” the Morgan Stanley team stated in its Sunday report, making reference to its previous estimates for the Macau market. “Licence renewal remains a key overhang, and could keep valuation multiples lower than long-term averages.”
The stockbroking arm of the investment bank added: “The first quarter of 2019 could see negative EBITDA growth year on year due to high base, higher opex and a smoking ban on premium mass and VIP areas.”
Morgan Stanley expects MGM China to increase its share of the market in Macau because of its MGM Cotai casino resort, and Melco Resorts to increase its share because of its Morpheus casino resort. Both properties were launched in 2018.
Macau’s casino GGR grew by 14 percent last year compared to 2017, according to the Gaming Inspection and Coordination Bureau. Last year’s accumulated GGR was about MOP302.85 billion (US$37.57 billion), compared to MOP265.74 billion the previous year. Most analysts have suggested this year’s GGR growth rate will be reduced, possibly to a figure less than 10 percentage points.
Jun 08, 2023
Jun 07, 2023
Jun 08, 2023
Jun 08, 2023
Jun 08, 2023
Macau recorded 158 “gaming-related” crimes in the first three months of 2023, up 24.4 percent on the 127 identified in the prior-year period, according to the latest statistics published on...Jun 08, 2023
Gaming content and equipment maker Konami says it is...Jun 07, 2023
Casino gaming content and hardware provider Light &...Jun 06, 2023
Electronic table games (ETGs) supplier Interblock dd is...Jun 05, 2023
Random number generator (RNG) testing tools are among the...Jun 01, 2023
Alfastreet, a manufacturer of electronic gaming machines,...Jun 01, 2023
Casino equipment maker Sega Sammy Creation Inc is tweaking...Jun 01, 2023
The iGaming segment in Asia “has grown rapidly” since...May 31, 2023
Showing slot machine players – via animations on the...May 31, 2023
Macau stocks in likelihood “have been punished too much...May 31, 2023
There are foreign companies still interested in investing...May 31, 2023
Thailand could pass the necessary enabling legislation for...May 30, 2023
China will remain a key market for Asian gaming...May 30, 2023
Alejandro Tengco (pictured in a file photo), chairman and...May 30, 2023
There are “plenty of reasons” for the global gaming...May 30, 2023
Gaming equipment provider International Game Technology Plc...May 30, 2023
The Global Gaming Expo (G2E) Asia 2023 Special Edition:...May 29, 2023
Austria-based gaming equipment maker and operator Novomatic...May 25, 2023
Sports betting and online casino operating platform...May 24, 2023
The business performance in Asia of gaming content and...May 18, 2023
The organisers of Global Gaming Expo (G2E) Asia 2023...May 17, 2023
Gaming content and equipment supplier Light & Wonder...May 16, 2023
Casino equipment maker Sega Sammy Creation Inc is to...May 09, 2023
Casino slot machine and digital gaming content provider...May 05, 2023
The Global Gaming Expo (G2E) Asia event in Singapore is the...May 04, 2023
An adviser to a Thailand parliamentary committee mulling...(Click here for more)
”I think the gaming sector has a huge potential in coming years. The situation around the pandemic drew a lot of attention from the casino operators to the ETG segment”
Michael Hu
President for the Asia-Pacific region at gaming supplier Interblock