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Macau gaming revenue to bounce to 2014 levels in nine years – Fitch

TAGs: fitch ratings, Leonard Postrado, Macau

It will take almost a decade for Macau to achieve the same gross gaming revenue (GGR) it posted in 2014, according to credit debt watcher Fitch Ratings.

Macau gaming revenue to bounce to 2014 levels in nine years - FitchAssuming that the former Portuguese enclave will post 5 to 6 percent growth, Fitch predicted that it will take nine years for Macau to chalk a MOP351.52 billion (US$44 billion) gross gaming revenue. The last time Macau registered such GGR was in 2014 while its all-time annual casino GGR record was in 2013, when the city recorded an aggregate of just under MOP360.75 billion (US$ 45.14 billion).

Macau’s GGR, however, plummets by 34.3 percent to MOP230.84 billion (US$28.89 billion) in 2015 due to China’s anti-corruption drive. For 2016, Fitch projects an approximately 5 percent decline in Macau’s gaming revenues.

“We expect a mid single-digit growth [Macau gambling revenue) in 2017 and beyond,” Alex Bumazhny, Fitch’s senior director for gaming, lodging and leisure, said in a briefing in Hong Kong on Wednesday, according to GGRAsia. “This assumes high single-digit mass-market growth and low single-digit VIP growth. With this growth rate it would take Macau over nine years to return to the prior gaming revenue peak reached in 2014.”

On questions whether Macau gaming stocks have already bottomed out, Bumazhny pointed out that Macau will not take the “V-shape” recovery.

Macau’s recovery will also rely on the strength of China’s economy, according to the Fitch analyst. He said the underlying Chinese economy needed to avoid a “hard landing” and other possible disruptions, such as a one-time yuan devaluation, in order for Macau to achieve a mid single-digit, annual growth.

“While the last 14-month period, and August especially, gives us confidence that the market has found solid footing, we do not expect a V-shaped recovery and believe the market remains susceptible to the macroeconomic and regulatory conditions on mainland China,” said the Fitch analyst.

Fitch said nonetheless it maintained a “positive view” on Macau in the longer term, on the basis that the Asia Pacific region remained “underpenetrated, at least as far as the mass market is concerned”.

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