GGRAsia – Op-regulator variance on Macau GGR meaningful: Nomura

Op-regulator variance on Macau GGR meaningful: Nomura

Oct 17, 2017 Newsdesk Latest News, Macau, Top of the deck

Japanese brokerage Nomura said in a Monday note there had been an ongoing “meaningful” difference between the Macau market revenue split as reported by the local casino regulator and that reported by the individual operators.

On Monday the Gaming Inspection and Coordination Bureau – also known by its Portuguese-language acronym DICJ – had reported casino gross gaming revenue (GGR) for the third quarter had expanded by 35 percent year-on-year in the VIP segment, and 7 percent in the mass market.

“There has been a meaningful difference between the DICJ mix and reported quarterly numbers from public companies,” wrote Nomura.

“If the second quarter’s [reporting] differential repeated, then the third-quarter mix reported by operators should be approximately 16 percent mass growth and approximately 30 percent VIP [expansion],” stated the institution.

The Japanese brokerage had previously mentioned that the discrepancy in the reported data by the gaming regulator and the operators could be the result of so-called “table reclassification”, which some investment analysts say tends to overstate Macau VIP growth and understate that for the mass segment.

In other commentary, the brokerage said it expected – based on current industry unofficial returns for daily GGR – that Macau’s October revenue would grow by approximately 18 percent year-on-year.

David Katz, an analyst at Telsey Advisory Group LLC said in a Monday note he estimated October GGR would be up 16 percent to 18 percent on the prior-year period.

“Indications are that the growth continues to be driven by VIP revenue rather than mass or slots, which is consistent with trends of the past year or so,” he stated.

Brokerage Sanford C. Bernstein Ltd said it expected October GGR to rise by 12 percent to 14 percent year-on-year, assuming an average daily rate of MOP670 million (US$83.3 million) to MOP700 million for the remainder of the month.

Commenting on unofficial data for the first 15 days of October, the institution’s analysts Vitaly Umansky, Zhen Gong and Cathy Huang stated: “While GGR was above our expectations, the mix was poorer than we had expected and mass was disappointing.”

Separately, Deutsche Bank Securities Inc said in a Monday note it was revising upward by 10 percent its estimate for Wynn Palace’s third-quarter earnings before interest, taxation, depreciation and amortisation (EBITDA), while reducing by 5 percent that for the Wynn Macau property on the city’s peninsula.

Commenting on the Wynn Macau Ltd properties’ likely EBITDA performance in the three months to September 30, analysts Carlo Santarelli and Danny Valoy wrote: “Our Wynn Palace revision (to US$130 million from US$118 million) more than offsets our approximately US$9-million forecast reduction on the peninsula (to US$189 million from US$198 million).”

Factors in the likely better than expected performance at Wynn Palace included, said Deutsche Bank, better volumes of mass play, including in the premium mass – a segment of players that bet in high denominations via cash play rather than via the credit used by VIP players – and “better customer retention stemming from mass floor reconfigurations”.