Nomura analysts not optimistic on Macau’s January GGR


The anticipation and optimism that 2020 would bring better gaming revenue to the casino city of Macau have been thwarted by reports of what health officials have described as a “serious” concern. Several cases of pneumonia have been reported in mainland China and these reports have spilled over into Macau, as well, raising the alarm. The news isn’t going to help Macau see greater gains after a slow 2019, and analysts with Nomura are not optimistic about this month’s gross gaming revenue (GGR) in the city, either.

macau-january-ggr-might-be-flat-y-on-y-nomuraAccording to a report prepared by Nomura analysts Harry Curtis, Daniel Adam and Brian Dobson yesterday, GGR is going to be “roughly flat” this month. GGR is up 11% compared to the daily average from last month, per the limited results available for the first five days of January, but down 4% compared to January of last year. The five-day period saw about $102.4 million in GGR, compared to $91.97 million in December.

Different gaming segments are showing different levels of performance so far this year. The analysts explained, “By segment, we estimate that average daily mass revenues are up approximately 5 percent to 7 percent year-on-year,” adding that VIP volumes are “approximately 15 percent to 20 percent lower” compared to a year ago. They point out that, historically, the per-day overall GGR across January and February averages 4-5% gains compared to December.

If the analysts are remaining relatively optimistic for January, only expecting GGR to be flat, the same isn’t true for next month. They point out that February’s year-on-year performance could be worse compared to last February and explain that the move of the Chinese New Year from February to January will be one of the catalysts of the weaker performance.

The Nomura analysts aren’t the only ones to be guardedly cautious about the current and near-future gambling action in Macau. Vitaly Umansky, Eunice Lee and Kelsey Zhu, analysts with the Sanford C. Bernstein brokerage, highlight the fact that the aggregate GGR for the city’s casinos across the first five days of the year was around $511.68 million, with a daily average of $102.33 million. This was due to a “high hold” by casinos and a surge in activity soon after China’s president, Xi Jinping, visited the city, but they added that the combined performance for the first two months of the year will only hover around -1-2% compared to the same period last year.

The analysts conclude, “One key driver of the January result will be how the visa constraints that were in place in November and December are being loosened. If we see continued tight visa controls in place, the GGR impact will be more negative than we currently forecast.”