Macau casinos to see ‘mass-market uptick’ in revenue, analysts say

TAGs: Macau

Although May saw a slight dip in Macau’s gross gambling revenue (GGR), the casino industry in the gambling mecca continued to gain strength. Several industry analysts, basing their opinions on unofficial returns in the industry, have said that GGR growth remains solid, and that June will see an “uptick” in the mass-market segment.

Macau casinos to see "mass-market uptick" in revenue says industry analystsAccording to DS Kim and Sean Zhuang, analysts with JPMorgan Securities (Asia) Ltd, “Based on our checks, gross gaming revenue (GGR) for the first 10 days of June was estimated at [around $1.05 billion], translating into [about $105.16] million per day.” The pair added in their memo, “This is better than May’s [$101.7] million per day (which was dragged by poor VIP luck), helped by two full weekends during the 10-day period.”

Year-on-year GGR for May increased by approximately 12.1%, reaching $3.15 billion. This followed a 27.6% year-on-year increase seen in April.

Kim and Zhuang continued, “VIP volumes have fallen modestly month-on-month, which is within the typical volatility; and major junkets have had fairly normal luck factor month-to-date, having recovered from poor luck in May.”

According to the analysts, JPMorgan’s own research indicates that “mass demand seems to be tracking strongly, up modestly month-on-month or over 20 percent year-on-year, showing no sign of slowdown despite the recent UnionPay issue.”

The reference to UnionPay comes from a reported crackdown on the use of China’s UnionPay point-of-sale machines in various shops located inside some of Macau’s casinos. There was no clear indication as to the reason behind the machines’ removal, but shop employees reported that they were told the machine were being taken away for an “upgrade.”

Japanese brokerage firm Nomura also addressed the UnionPay issue. Earlier this week, the firm said that the removal of the UnionPay devices “have had little (if any) near-term impact on overall demand … as evidenced by last week’s strong GGR number.”

Three Nomura analysts, Daniel Adam, Harry Curtis and Brian Dobson, said in the Monday report, “By segment, month-to-date we estimate that average daily VIP volume is [about] 3 percent lower sequentially versus the average in May, VIP hold percentage is [circa] 2.85 percent (versus the “normalised” hold range of 2.7 percent to 3.0 percent), and mass GGR/day is tracking [circa] 2 percent to 3 percent higher versus May.”

The analysts further stated that, assuming GGR for June slows “in line with the trailing six-year median,” the final GGR for the month could reach between $2.7 and $2.9 billion. This would indicate growth of between 10-20% year-on-year for the industry.


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