GGRAsia – VIP driving Macau GGR growth into June: Nomura

VIP driving Macau GGR growth into June: Nomura

Jun 13, 2017 Newsdesk Latest News, Macau, Top of the deck

Several investment analysts predict the Macau VIP market will again have been the driver for the city’s monthly year-on-year growth in casino gross gaming revenue (GGR) once the full June numbers are officially published.

Based on unofficial industry returns, Japanese brokerage Nomura estimated in a Monday note that daily Macau GGR for the previous seven days had averaged MOP719 million (US$89.5 million). It said that, assuming daily casino GGR for the rest of the month at MOP650 million to MOP700 million, GGR growth for the whole of June would range between 25 percent and 30 percent year-on-year.

“Consistent with recent trends, we believe that GGR growth continues to be driven by VIP: first, volume growth, which we estimate is tracking up sequentially in June, and second, higher than normal hold of around 3 percent month-to-date,” stated Nomura.

Brokerage Sanford C. Bernstein Ltd predicted June GGR would record a year-on-year increase of between 23 percent and 28 percent. “According to the channel [sources], mass GGR was down marginally while VIP volume was up month-on-month, and VIP luck factor was in normal range at around 3 percent,” it stated in a Monday note.

Macau’s May GGR rose by 23.7 percent year-on-year. If analysts’ latest estimations prove correct, June would be the 11th consecutive month of Macau GGR growth following an earlier period of retreat, that some analysts had said was linked to a mainland China anti-corruption campaign.

Nomura stated in its Monday note it did not think a new ATM measure, requiring holders of mainland China-issued bank cards to submit their identity card for scanning and pass a facial recognition test, would have significant negative impact on the market. “History also tells us that, while there could be a negative near-term impact in grind or premium mass gaming revenue growth, Chinese gamblers can be remarkably resourceful when it comes to trying to move money out of the mainland,” said the brokerage.

Nevertheless, Nomura predicted that Macau GGR growth in the second half of the year is likely to slow down. “Despite better-than-seasonal GGR growth year-to-date through the second quarter of 2017, we believe upside to estimates for the balance of the year could be limited by tougher second half of the year comps [comparisons],” it stated.