GGR decline expected to continue in 2016, says Citi

Macau's GGR is expected to fall 4 percent in 2016, according to analysts at Citi Research, who have cut their estimates for a gain of 4 percent due to a revision of VIP expectations to a fall of about 18 percent.  

Mass will grow in line with the time-weighted 10 percent increase in hotel supply, reflecting the delay in the opening of Wynn Palace until Jun. 25, 2016, and the belief that MGM Cotai and The Parisian will likely open in late Y16Q4.

On the subject of VIP decline, Citi says, “The big question mark in Macau remains the uncertainty in VIP and how much further there is for VIP to fall. VIP fell from a peak of MOP 24.2 billion in Oct 2013 to a six-year low of MOP 7.4 billion in Nov 2015, with no signs of stabilization.”

Citi recommends Melco Crown and Wynn, given their new developments, however reiterates that it is still too early to decide whether the new developments will grow market share, or cannabalize it. “Stay with the game changers: MPEL and WYNN (new property opens in June-16). The jury is still out as history has shown that it usually takes up to 20 weeks to ramp a property.”

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