Casino gross gaming revenue (GGR) for July in the Macau market is tracking for a year-on-year decline of between 4 percent and 8 percent, after a strong finish to the month, suggest several brokerages.
The GGR decline year-on year market-wide in the first half of this year was 11.4 percent.
“Assuming an average daily rate of MOP575 million [US$72 million] to MOP650 million for the remainder of this month, July GGR would be MOP17.4 billion to MOP18.0 billion, representing a year-on-year decline of 4 percent to 6 percent, versus an 8.5 percent year-on-year decline in June,” said analysts Vitaly Umansky and Clifford Kurz of brokerage Sanford C. Bernstein Ltd in a Monday note.
Japanese brokerage Nomura estimated the year-on-year decline in July GGR would be 6 percent to 8 percent.
“With the summer holiday starting to kick in and with a slightly higher VIP win rate of 2.9 percent to 3.0 percent (versus theoretic average of 2.85 percent), average daily gaming revenue, excluding slots, is up 11 percent week-on-week to HKD563 million [US$72.6 million],” said Nomura in its Monday note, in a reference to the third week of July.
But analysts Kenneth Fong and Isis Wong of Credit Suisse AG struck a note of caution on Macau in a Tuesday note.
“While the market may be excited by the seasonal pick up in GGR into the summer holiday, we believe the issues are: 1) demand is not picking up fast enough for new supplies (July average daily revenue is still tracking the second lowest in 2016), and 2) very slow non-peak times,” they stated.
That was a reference firstly to new supply coming into the Macau market, with three major casino resorts due to open on Cotai between late August and the first half of 2017.
David Katz and Brian Davis of Telsey Advisory Group LLC said in a Monday note: “The regular weekly readings on the Macau market heading into this quarterly report [season] have disagreed by a fairly wide margin. We do not expect a return to market growth rates of the past, but are keenly focused on whether modest growth year-on-year is possible by the end of the year.”
JP Morgan Securities (Asia Pacific) Ltd analysts DS Kim and Daisy Lu stated in a Sunday note: “We forecast [Macau] GGR to finally turn positive year-on-year by the fourth quarter 2016 (though only +2 percent). We expect EBITDA [earnings before interest, taxation, depreciation and amortisation] can turn around even faster at +7 percent year-on-year in the fourth quarter, printing the first positive growth in three years.”
They added: “This is a nice story, but recall, even these reasonably hopeful assumptions would somewhat miss current market consensus.”
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Vitaly Umansky, Kelsey Zhu and Tianjiao Yu
Analysts at brokerage Sanford C. Bernstein