Chinese gamblers are no longer driving gross gambling revenue across Asia, with China growth seen at between 0 to 3 percent over the next two years, compared with a gain of 11 to 13 percent in non-Chinese GGR, according to a new report from analysts at Macquarie.
The Macquarie Asia Gaming Framework report also found that across Asia, the mass gambler is gaining prominence at the expense of the VIP, with the mass share of the market now at 49 percent, compared with 36 percent in 2011.
The major beneficiaries of the new trends are likely to be Australia and Malaysia, driven by improving growth in both Chinese and non-Chinese players and boosted by the relatively weak currencies. On the flip side, the bank has a negative view of both Macau and South Korea, which are heavily dependent on the China market, along with declining returns due to increasing capacity from new resorts.
After compound average growth rates of 24 percent from 2009 - 2014, GGR is set to decline by 8 percent in Asia from 2014 to 2017, with most of that drop having already occurred in 2015. Macau took the brunt of the fallout, with about $14 billion in Chinese GGR estimated to have evaporated. Those funds are not coming back anytime soon, it said.
For Macau, growth next year is seen at 1 percent and another 5 percent in 2017, with most of this growth driven by the mass market.
Australia is likely to see 10 percent growth over the period, helped by tourism arrivals and improved local market penetration, while Malaysia is likely to be up 8 percent, again helped by increased tourism.
The Philippines is forecast to see high growth of 13 percent, but this will be driven by capacity expansion, which is likely to put a squeeze on margins, it points out.
In fact, the report points out there will be a 50 percent increase in capacity over the next two years across Asia, which is going to mean a deterioration in returns.
“While adding only 3-6 percent GGR growth and 1 percent EBITDA growth to Asia, the additional capacity will lead to significant returns deterioration in our view. Our bottom-up analysis suggests a 510bps decline in net margins and 130bps decline in EBTIDA margins for Asia overall from 2014-17E,” it said.
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