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Macau posts 36.4 percent increase in January GGR

Macau GGR in January came in higher than analyst expectations, reaching MOP 26.3 billion (US$3.3 billion) in the month, representing a year-on-year increase of 34.6 percent.

The growth was ahead of consensus, which had estimated growth to be between 20-28 percent for the month of January.

According to a note from Bernstein, average daily revenue for the month was MOP 847 million, an increase of 16 percent compared to December.

For February 2018, the brokerage said it is preliminarily estimating approximately 20 percent growth as a result of the softening pre-CNY environment.

Fitch forecasts slowed revenue growth

On Thursday, Fitch Ratings held a media briefing on Macau’s gaming sector outlook. During the briefing, Fitch covered the key drivers of Macau revenue in 2018, as well as the future operating environment for Macau’s operators come 2020.

The ratings agency forecasted Macau to post slowed GGR growth in 2018, with total GGR increasing 11 percent, VIP growing 8 percent and mass growing 14 percent year-on-year.

Fitch said the slowdown in VIP is reflective of “inherent volatility and the potential for an economic slowdown on mainland China.”

Growth in mass however, will be driven by new supply and the repositioning of certain assets towards the premium mass segment, such as the opening of MGM Cotai in Q1 and the conversion of rooms at the Parisian to suites.

“Mass market as a whole will comprise nearly half of total GGR, up from roughly a third during the market’s prior peak,” said Fitch.

Recent and pending infrastructure projects such as the Hong Kong-Zhuhai-Macau bridge, the permanent Taipa ferry terminal, and the rail link to Zhuhai airport and intracity light rail, should make Macau more accessible, added Fitch.

Looking at Macau’s concessionaires, Fitch says it expects MGM to be the largest beneficiary in 2018 given its new Cotai opening - which is geared to the mass market. In the long term, Las Vegas Sands is best positioned for growth.

With regards to the renewal of concessions in Macau, Fitch believes that Macau regulators will not look to upset the current operating environment when it comes time for renewals.

“All of the operators fared well in the government’s mid-term reviews in 2016, have invested significant capital, and are supporting the growth of non-gaming segments,” said the agency.

However, the renewals are not without risk, including a chance of a seventh concessionaire or a large one-off renewal fee, said Fitch.

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