Macau August GGR tracking below consensus: WF

Monday 24th of August 2015

Wells Fargo says August gross gaming revenue for Macau continues to track below consensus of roughly negative 30 percent to negative 35 percent year-on-year.

Based on checks through August 23, WF analyst Cameron McKnight estimates a decline of negative 36 percent to negative 38 percent with average daily revenue at MOP600 million ($75.1 million) last week compared with MOP586 million the prior week. Month-to-date ADR was MOP583 million, down 2.9 percent compared with July's MOP600 million average.

“After three weeks of data, our estimate for the month continues to track below est. consensus of roughly -30% to -35% yr/yr. Checks suggest VIP hold was lower than normal during the week (~2.6-2.65% vs. 2.7% in the prior week).”

“We remain neutral on Macau gaming as the market adjusts to a ''new normal'' of tighter government oversight, tangible signs of a weak Chinese economy, and a Macau recovery that is likely to be flatter than prior upturns.”

Following an agreement between China’s central bank and Macau to tighten anti-money laundering measures, McKnight said it is evident the anti-corruption campaign is here to stay.

“We believe [the agreement] could signal further management of growth and policy settings from Beijing towards Macau.

“We continue to believe Macau revenues will be pressured this year-with stabilization at some point. When that occurs and growth resumes, we firmly believe we will not see another V-shaped recovery.”