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VIP not likely to show positive Comps, even in 15H2, UBS

Pressure on Macau’s high-roller sector is not slowing down and will likely mean VIP revenue will comp negatively this year, analysts at UBS said. 

“From a recent visit with a mid-sized Macau junket operator, pressure on VIP rev is ongoing and he is not expecting VIP revenue to comp positively this year, even against

big declines that started in Q3 last year,” analysts Robin Farley and Arpine Kocharyan said in a note.

With some junkets already having closed their rooms, more are expected to do so as bad credit is reducing liquidity and creating more risk for junkets rather than operators. 

“Credit levels extended to junkets have not changed significantly. With operators typically lending out credit equal to roughly 3x monthly commissions, the operators are

protected from much of the credit risk since they have more than one month of the junket's commissions as collateral, since credit is dependent on chip purchase and

commission history.”

“We believe Sands and Wynn are looking to bring new junket operators to their

rooms.” The analysts cite proxy betting as an area junkets could cash in on but regulations could prove tricky.

“One area that may be an opportunity for growth is proxy betting, but it strikes us that this could have regulatory resistance.” 

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