Macau August GGR down 34-38 percent as gov't extends "olive branch" on smoking : WF

Wells Fargo estimates that based on checks through August 9, 2015, Macau gaming revenue declined 34 percent to 38 percent, below its prior estimate of 30 percent to 35 percent. 

Checks suggest average daily revenues were MOP566 million ($71 million) last week versus July ADR of MOP600 million.

“While this is just one week of data it is below consensus that August would track around -30% to -35% yr/yr. Our checks (show) slightly lower VIP hold than normal (2.70% vs. 2.85),” said analyst Cameron McKnight.

WF estimates August growth to track at around negative 34 percent to negative 38 percent year-on-year, and assumes MOP585 million to MOP635 million in revenue for the remaining weeks in August. 

In response to the Secretary for Social Affairs and Culture stating that the government may be open-minded and allow smoking lounges in gaming VIP rooms, McKnight said, “this could be an olive branch to operators, who have withstood significant revenue declines this year.”

“Ultimately, we think the market is going to a full smoking ban, and its implementation will crimp VIP revenues by 10-15 percent when it happens.”

Analyst David Bain at Sterne Agee estimates Macau table-only gross gaming revenue to be MOP4.8 billion from August 1 to August 9.  

“Based on market share results and other checks, we believe early August was negatively impacted by hold/win rate. Our August GGR growth forecast range remains between -30% to -34 percent.”

Regarding the smoking ban, Bain says while austerity measures were later called unnecessary given July GGR was slightly better than the Government’s forecast, “we believe austerity considerations had an impact with public and Government opinion toward the allowance smoking lounges versus a total smoking ban.”

 

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