Macau junket David Group winding down operations: Nomura

Thursday 15th of January 2015

David Group, one of Macau’s largest junket operators with between 3 to 5 percent of VIP rolls, may be winding down its operations, according to analysts at Nomura.

The bank said in a note that it had been informed by industry information provider MGG that the company is in the process of shutting its VIP rooms. However, it also noted that subsequent phone calls to the group had not confirmed the reports.

“Our channel checks yesterday with the David Group’s VIP receptionists found that they had no idea whether the group was to shut down. In addition, when asked, they said no minimum fund is required to open an account for its VIP rooms, which is new to us because David’s VIP rooms had previously required at least HK$100,000 ($12,896) to open an account,” the note said.

David Group has 7 VIP rooms in Macau in Wynn Macau, Galaxy Entertainment, L’Arc Macau, MGM China, and the Four Seasons, according to its web site.

A local Macau newspaper reported recently that about 50 VIP rooms may be on the verge of closing amid a slump in revenue from China’s high rollers and stricter enforcement of regulations.

Gross gambling revenue dropped about 30 percent in December, taking GGR to the first annual decline of 2.6 percent since records began in 2002. Analysts are expecting another contraction this year as the operating environment remains tough, especially in the first half.

Standard Chartered said in a note in November that it believes the junket system in Macau is “near broken.” Funding and liquidity remains very tight, junkets are facing difficulty obtaining capital, and turning that capital, leading to weaker rolling volumes and margin pressure, it said.