The first 16 days of August yielded MOP9.2 billion ($1.15 billion) in Macau’s gross gaming revenue, indicating a daily run rate of MOP586 million, up from MOP567 million per day the week before due to slightly stronger VIP contributions, according to HSBC Research.
HSBC analysts say the full month could finish between MOP17.5 to 18.5 billion, down 36 to 39 percent year-on-year, based on GGR of MOP550 million to MOP620 million per day for rest of the month.
The note says that investors have concerns that a weaker RMB could put junkets under pressure in the short run as their outstanding debt would come down in value, but that some operators think junkets earn more commission than the 2 percent currency move and they are well-buffered.
“Gambling budget for cash players will undoubtedly be negatively impacted by the exchange rate. Pick up in GGR could take time.”
HSBC adds that given revenue trends remained uncertain and the sector outperformance since July, “we think sector share price could take a breather in the short run.”
“A more meaningful and sustainable pick up in mass revenue is required to further re-rate the sector.”
Citi Research put the August GGR rate for the period at MOP9.1bn, with a daily run rate of MOP567 million.
“Reflecting another week of poor hold, we trim our August GGR forecast from MOP19bn to MOP18.5bn, -36% YoY, implying a daily run-rate of MOP630m for the rest of the month.”
Citi said that in a meeting with Andrew Lo, director of Suncity group, he continues to see the VIP business stabilizing, with the number of players increasing over the past few months. Suncity had about 600 active customers per day in July, 20 percent higher than the beginning of the year.
“With the government delaying the introduction of the full smoking ban, Lo believes the VIP business has already bottomed and is starting to recover. Lo believes the severe decline in VIP business in the past 18 months was mainly hit by the liquidity tightening after one major VIP junket ran away last April.”
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