March GGR growth seen moderating

Sunday 12th of March 2017

Macau’s gross gaming revenue growth is expected to moderate in March after a near 18 percent jump in February that topped expectations, analysts say.

Buckingham Research Group says it sees March GGR growth in a range of 10 percent to 12 percent, while Bernstein is expecting a range of 9 percent to 11 percent. Buckingham said its outlook assumes an average daily revenue including electronic gaming of about HK$620 million to $630 million, down from the $800 million recorded in February.

“According to our channel checks, last week's number was better than anticipated on robust VIP while VIP hold rate was around normal level,” Bernstein said in a note. “With respect to individual operators, the devil remains largely in the details regarding the breakdown between VIP and Mass and overall market shares (which are not available) and as such the weight of the overall GGR number needs to be taken with a bit of skepticism.”

February’s GGR reached MOP 23 billion, bringing Macau’s 2017 accumulated gross revenue to MOP 42.2 billion, up 10.6 percent compared to MOP 38.2 billion in the same period in 2016.

In January, Macau reported GGR of MOP 19.3 billion, an increase of 3.1 percent, missing consensus estimates due to a slowdown ahead of Chinese New Year.

“Following better than expected growth in Jan-Feb combined, we believe GGR growth rates could remain at low-double digit rates in March-July as comps on YOY basis become easier. Our channel checks indicate that junket liquidity remains strong, supporting volume in the coming months,” UBS analyst Robin Farley said in a note. “Strong VIP junket liquidity and volume should benefit Wynn and Galaxy the most, in our view.”

Analysts say much of the growth appears to be coming from a rebound in the VIP sector. A strengthening Chinese economy has spurred luxury spending on the Mainland, with the effects seen to be spilling over into Macau’s gaming sector.

However, Bernstein said in an earlier note that it expected this rally to taper off after the first half of this year and expects only moderate VIP growth in the longer term.