Analysts predict 3% decline in Macau’s August GGR

TAGs: Leonard Postrado, Macau, Nomura

Analysts are betting on a slow improvement in Macau’s casino gross gaming revenue (GGR) for August compared to last year’s data.

Analysts predict 3% decline on Macau’s August GGRJapanese banking giant Nomura predicted a 3 percent decline for Macau’s GGR in August, the smallest year-on-year contraction since February’s 0.1 percent GGR tally a year earlier. Unlike the month of August, February is a busy month for the industry due to the Chinese New Year Holiday.

August GGR prediction is lower than the July’s casino GGR, which, according to official data, is at a 4.5 percent drop to MOP17.77 billion (US$2.22 billion).

“For the first seven days of August, average daily gaming revenue (GGR), excluding slots, was down 5.5 percent week-on-week to HKD538 million [US$69.4 million], despite a lucky VIP win rate (3.2 percent versus normal of 2.85 percent),” Nomura said in its Monday note, according to GGRAsia.

Assuming an average daily GGR – excluding slots – of HKD520 million (US$67.03 million) to HKD550 million (US$ 70.9 million) for the remainder of August, the brokerage firm forecasts a monthly tally of HKD16.5 billion to HKD17.2 billion (US$2.22 billion), “down 4 percent to up 1 percent year-on-year.”

Citing their channel checks, analysts from the HongKong-based Sanford C. Bernstein Ltd in Hong Kong pointed out that VIP volume and mass segments has remain weak as it registered a decline in the first week of August.

The first week performance of Macau’s VIP and mass segments had been affected by the onslaught of Typhoon Nida, which barreled through the Pearl River Delta region. Most of flights and ferry sailings to and from Macau and Hongkong were suspended as the HongKong hoisted a storm warning signal No. 8.

For August, Sanford analysts peg that the Macau’s August casino GGR will register a three percent decline or an increase of 3 percent from the prior-year period.

Meanwhile, other investment analysts are optimistic that the slump in Macau gaming sector is waning down. Part of the growth of Macau’s casino sector will be boosted by the opening of two major new casino resorts – Wynn Palace from Wynn Macau Ltd and the Parisian Macao from Sands China Ltd – on August 22 and September 13 respectively.

“Signs continue to suggest that the Macau market has stabilised in the literal sense and is at least declining at a narrowing rate. We believe the context for the opening of new properties in the coming weeks is therefore positive,” said analysts at Telsey Advisory Group LLC.


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