UBS raises 2018 mass forecast, but says UnionPay may weigh

Thursday 7th of June 2018

UBS has raised its gaming estimates for the mass market for 2018 to 18 percent from 17 percent previously, though adds the sector is likely to be the most affected by the government’s confiscation of China UnionPay point-of-sale terminals.

UBS said according to its checks, the crackdown is Macau-wide, and not limited to Cotai. It pertains to ICBC and BOC Union Pay POS locations that have seen unusually large volumes of business and no timeline has been given for when confiscated machines will be returned.

This is more likely to affect the mass market, which relies more heavily on them as a source of funds, than properties with a large junket presence.

The firm says VIP growth for the year is likely to be 15 percent, down from its prior forecast for 16 percent, leaving its overall GGR estimate for the year unchanged at 16 percent. UBS said the change in the mix reflects the fact VIP GGR in Q1 missed expectations by 50 basis points.

“We believe market expectations for Macau for 2018 are in the 16-18 percent range, largely in line with our estimates, though we expect more upside to come from mass growth.

“For '19, we now expect +8 percent GGR growth, down from +9 percent previously, entirely driven by higher base in '18E, as our absolute level gaming revenue for '19 is unchanged.”

The estimates assume the implementation of a full smoking ban next year.