Macau casinos started the month of January on a solid footing but it eventually fumbled along the way.
On paper, Macau casinos seem to be performing well given that the January gross gaming revenue rose 3.1 percent to MOP 19.3 billion (US$2.4 billion). The latest GGR figure is a reversal of Macau casinos’ January 2016 record, which tumbled by 21.4 percent.
Analysts, however, frowned at the newest data provided by Macau’s Gaming Inspection and Coordination Bureau – which included four days of Chinese New Year festivities beginning January 28 –since it fell short of their expectations.
“This was considerably lower than consensus of +8.5% (range of +5% to +12%). We would expect the Macau names to be weak on this print, especially the names with greater exposure to VIP. The results are especially disappointing given what appeared to be a very strong start to the month,” Union Gaming analyst Grant Govertsen said in a note issued on Wednesday.
The Macau-based analyst noted that betting volume from high-stakes players was softer than initially expected, saying that “at least two peninsula properties have played unlucky at the VIP tables over the first few days of CNY (Chinese New Year).
Govertsen also factored in the placement of the Chinese New Year, which straddles both January and February.
“CNY began on January 28th (Saturday) this year vs. February 8th (Monday) last year. Therefore, January 2017 felt the full negative impact of the traditional pre-CNY seasonal slowdown. Given the positive trends over the last few months we were hopeful that the traditional slowdown would be somewhat mitigated. This was obviously not the case,” the analyst pointed out. “The timing of Chinese New Year (Part 2). CNY began at the end of the month and based on the conversations we’ve had with junkets over the last few days we understand that many didn’t see any meaningful volumes until January 30th. As such, there was little VIP contribution to the January numbers.”
Macau casino stocks were in the red following the announcement, with Wynn Macau slumping as much as 4.5 percent and Sands China losing as much as 2.8 percent in Hong Kong trading. SJM Holdings Ltd stocks slid 2.6 percent and MGM China Holdings Ltd. slipped 2.4 percent.