Macau might be experiencing a slump. Gross gaming revenue (GGR) dipped in March and gaming industry analysts are now predicting that there could be an even bigger drop in April. To this point, however, no one is sure what the drop may be. Union Gaming stated several days ago that the GGR for April would be lower than expected, although it added that it should climb later this year, and other industry analysts are now speaking up, reiterating that position and prediction a slow month ahead.
According to Nomura brokerage analysts Harry Curtis, Daniel Adam and Brian Dobson, Macau’s GGR for April will be around $2.97 million to $3.1 billion. They based their forecast on how the market has been performing so far this month, adding, “Although the approximately 5.5-percent year-over-year decline at the midpoint of our estimated range implies approximately 500 basis points of deceleration versus March’s 0.4 percent year-over-year decline, we expect positive growth to resume once we lap the tough +28-percent comparison in April.”
Nomura has previously stated that improving consumer credit conditions on China’s mainland are helping to paint a brighter picture for Macau and its GGR. However, things haven’t been turning around as much as expected and, according to the company, “VIP volume growth is tracking approximately 8 percent lower sequentially versus last month’s average.”
Analysts with Sanford C. Bernstein agreed, noting that GGR could dip 4% year-on-year. The analysts, Vitaly Umansky, Eunice Lee and Kelsey Zhu, explained, “We expect year-on-year comparison to be difficult through [the] end of April, as GGR was very robust in early 2018, until U.S.-China trade tensions heightened,” and said that channel checks of Macau GGR for the first week of the month indicated revenue of about $644 million. This is an average of about $91.95 million per day, a decline of 13% year-on-year.
The Bernstein analysts further provided, One area of potential high-end GGR stabilisation and renewed strength may come from a recovering credit cycle in China, which may support VIP recovery in the second half.”
A week ago, Macau’s Gaming Inspection and Coordination Bureau indicated that GGR in March had dipped a slight 0.4% year-on-year. That brought the aggregate drop for 2019 to $9.46 billion, or 0.5% year-on-year, and this decline will continue at least through April.
