Brokerage JP Morgan Securities is apparently less optimistic on Macau than its regional peers in the financial industry.
JP Morgan said on Monday that it is predicting Macau’s GGR to sputter in the coming months as positive catalysts in the sector run out. From a previously bullish stance, JP Morgan has taken a neutral outlook on the stocks of Macau gaming operators.
“We think investors will focus more on the individual operator’s execution and resulting earnings revision potential, making stock calls increasingly more important,” DS Kim and Sean Zhuang, analysts from JP Morgan, said in its note on Monday.
JP Morgan has issued its forecast despite the good news that the former Portuguese enclave’s VIP gambling market grew twice as fast as the mass market casino revenue in the first quarter of this year.
Figures released by Macau’s Gaming Inspection and Coordination Bureau (DICJ) show the special administrative region’s casinos earning gambling revenue of MOP 21.2b (US $2.65b) in March, an 18.1% improvement over the same month last year.
The data prompted international credit debt watcher Fitch Ratings to raise its forecast on Macau’s VIP and mass market 2017 growth to 12 percent. The financial institution has taken into account the possibility of China’s implementation of a tight monetary policy and increased real estate restriction when revising its outlook upward.
Morgan Stanley also shared Fitch’s positive sentiment on Macau, raising its 2017 GGR forecast for the Macau industry to 12 percent, from 9 percent.
Analysts Praveen Choudhary, Alex Poon and Thomas Allen are predicting 11 percent year-on-year growth for the mass-market segment while they raised their 6 percent outlook for the VIP growth forecast to 14 percent year-on-year.
Tourists in Macau grew 5.6 percent in Q1
Meanwhile, Macau’s Statistics and Census Service reported that the number of visitors to Macau in the first quarter of 2017 jumped 5.6 percent to over 7.87 million.
The tourists in Macau were led by mainland visitors, which, according to the agency, grew 7.6 percent. They make up 67.5 percent of the total Macau tourists for January to March 2017 period or nearly 5.32 million arrivals.
The total of overnight visitors from all markets in the January to March period rose 12.1 percent year-on-year, to just over 3.93 million. The number of same-day visitors declined by 0.2 percent, to just over 3.94 million.
