UBS lowers its 2015/16 Macau outlook

UBS said it expects further downside revisions to Macau’s gross gaming revenues amid continued pressure on high-roller gaming due to uncertainty over junket regulations and a full smoking ban.

UBS analyst Robin Farley said Macau market GGR has been revised to negative 21 percent in  2015, positive 8 percent in 2016 and positive 11 percent in 2017, from previous estimates of negative 5 percent/positive 10 percent/positive 9 percent, respectively. VIP revenues have been revised to negative 31 percent, zero percent, and positive 6 percent from down 11 percent / up 6 percent and up 3 percent, respectively.

“Near-term upside to our numbers could come from better mass growth and potentially from current loosening of liquidity/property market restriction in China that could help VIP gaming.”

“We note that a +20% increase or a -20% decline in VIP in '16 (vs. our flat est.) could move sector EBITDA by about +7%/-7%. With comps becoming easier in the back half of '15, we assume slight slowdown in Q2 and seq. improvement in Q3-Q4. Our lower GGR assumptions result in roughly 19% lower EBITDA revisions on average across the sector.”