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Bears and bulls divided over Macau August GGR

August appears to have emerged as an interesting month, dividing opinion on the performance of casino operators in Macau following gross gaming revenue results, according to a report by Bernstein Research.

The report says that bears would argue August gross gaming revenue, which fell 35.5 percent year-on-year to MOP18.62 billion, remains weak and failed to lite demand despite seasonal uptick in the past.

However, “bulls point to the sequential strengthening in Mass GGR and the stabilization of ADR versus July. On the balance, we characterize the month ‘less bad’.”

“Nonetheless, the two camps would both agree on the liquidity constraints with battered junkets in Macau, particularly after China's months-long crackdown on underground banking. Junkets' tightened liquidity is also manifesting itself in rising lawsuits filed in Macau courts.”

Bernstein sees mass segment sequential stabilization as encouraging, with new casino resorts opening and nearer term, the holiday season approaching.

At company level, Sands China was the winner in taking market share and extending its leadership in Mass as its product portfolio focused on mass and its marketing and operational expertise allows the company to weather the storm.

Galaxy is tipped to face headwinds due to a slower than expected ramp up of its newly opened Galaxy Macau Phase 2.

“Looking ahead, we forecast September GGR to decline -30% y/y.”


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