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September GGR likely to drop 30-32 percent: HSBC

The first 20 days of September yielded MOP11.8 billion ($1.5 billion) in gambling revenue in Macau, indicating a full-month decline of 30 to 32 percent year-on-year, driven in part by the Dore scandal, according to HSBC Research.

Daily run rate during the past week came in at MOP493 million per day, dropping significantly from MOP607 million per day the week before.
“A more normalized win rate played a role; the w-o-w change on VIP volume was less pronounced.”

“The Dore incident, which happened over 10 days ago is another contributing factor as it has triggered some redemption from depositors, similar to the Huang Shan incident that we observed in April 2014.”

HSBC visited Dore's VIP room at Wynn and says the operations are up and running, indicating the incident should have a limited impact on the rest of the junket business.
“We understand that it is generating 70-80 percent of their normal volume. Therefore, we continue to think that the Dore incident is a one-off in nature and the amount involved should have limited impact on the junket system at large.”

“Having said that, VIP business could see short term turbulence if junket investors were to cash out irrationally. Also, the government is looking to tighten junket regulations. This is positive in the long run but could put some short term pressure on the VIP segment.”

Citi Research said in a note the daily rate decrease also likely reflects the usual seasonal slowdown before National Day Golden Week.

“We continue to expect softness this week and thus maintain our full September GGR forecast at MOP17.5bn, -32 percent YoY, implying a daily run-rate of ~MOP570m for the rest of the month.”

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