Macau Oct GGR below consensus, impacted by China macro

Thursday 1st of November 2018

Macau’s gaming revenues came in slightly below analyst estimates in October, reaching MOP27.3 billion in the month, an increase of 2.6 percent year-on-year.

Bernstein analysts on Thursday said the GGR performance in the month was impacted by continued weakness in China’s macro environment.

“Other than weakening macro environment, we begin to observe tighter liquidity controls in China. As we have been highlighting, these trends in China will create headwinds for GGR growth in Macau,” added the brokerage.

Union Gaming analysts said that GGR was also impacted by President Xi Jinping's trip to the region, in order to attend the opening of the Hong Kong – Zhuhai – Macau bridge, as well as the long-holiday period between Mid-Autumn Festival and Golden Week, which would have led to trips to further flung destinations such as US and Europe.

In a separate note - Bernstein’s China Premium Consumer Tracker, the brokerage noted that there was a clear deceleration in premium consumption in 18Q3.

In Macau gaming, this was evident in slower VIP growth, despite higher Chinese visitation and high occupancy rate.

“In Q3 2018, 28 out of our 37 indicators decelerated quarter over quarter. This is concerning, even if most metrics still grew year on year,” said the brokerage.

Looking at the month of October, Bernstein noted an increase in visitor arrivals during Golden Week (Oct 1-7), giving a boost to VIP and mass GGR growth. However, revenues for the remainder of the month were soft.

Bernstein said that the trends will likely continue to impact GGR growth, and is estimating the month of November to see only 2-4 percent year-on-year growth compared to 2017.