Strong GGR in VIP, mass might deliver growth in May: brokers
Two weeks into the month and the forecasts for year-on-year growth in gross gaming revenue (GGR) in Macau for the entirety of May vary from stagnation to a moderate increase.
In updates published on Tuesday, brokerage Sanford C. Bernstein Ltd forecast between 2 percent and 4 percent year-on-year growth in GGR this month, while Nomura’s Instinet LLC sees flat GGR growth. Both brokerages said they have seen stronger revenues from the VIP and mass gaming segments so far this month compared to April.
The stockbrokers issued their latest forecasts based on indications of Macau casino GGR in the eight days ended May 13.
In its note, Sanford Bernstein analysts Vitaly Umansky, Eunice Lee and Kelsey Zhu said they could see a potential improvement in the VIP gaming segment over the longer term.
“Potential high-end GGR stabilisation and renewed strength may come from a recovering credit cycle in China, which may support VIP recovery in the second half,” the analysts wrote.
“The recent heightened tension in U.S.-China trade relations, however, casts uncertainty over the GGR recovery. If the trade war sustains over an extended period, it will likely pose a headwind to China’s economy and gaming spend from China’s high-net-worth individuals in Macau.”
Sanford Bernstein said its channel checks indicated that Macau casino GGR flowed in at the rate of MOP775 million (US$95.9 million) a day, on average, between May 6 and May 13, slowing after four days of holidays at the beginning of the month in mainland China, the main source of gamblers to Macau casinos.
The stockbroker thinks the hold rate in the VIP gaming market has normalised, having been higher than usual in the preceding two months, and it estimates that volume in the mass-market and VIP market alike was at least 10 percent greater than a month earlier.
The Instinet stockbroking arm of the Nomura banking group said Macau casino GGR will be between MOP25 billion and MOP26 billion in May, about the same as a year earlier.
Nomura estimates that Macau casino GGR came in at an average rate of about MOP750 million a day between May 6 and May 13, more slowly than during the holiday period in mainland China.
Analysts Harry Curtis, Daniel Adam and Brian Dobson said average daily volume in the VIP market for gaming was tracking about 30 percent higher than a month earlier; the VIP hold percentage was about 3 percent, at the high end of the expected range of 2.7 percent to 3 percent; and that daily GGR in the mass market was between 12 percent and 15 percent greater than the average in April.
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