UBS revises down Macau GGR forecasts through 2017

Monday 21st of September 2015

UBS said it’s cutting its forecasts for Macau gross gaming revenue for this year, next and 2017 due to the weaker VIP outlook and the potential for further depreciation in the Chinese currency.

The firm now sees 2015 GGR of -34 percent down from -30 percent previously, for 2016 it expects growth of 2 percent, down from a prior forecast for 6 percent growth and for 2017 it forecasts growth of 10 percent, down from 11 percent previously,

“While we believe macro uncertainty in China remains the biggest overhang on Macau outlook, and while there could be more downside risk to higher end gaming and premium mass, we believe grind mass in Macau has seen some minor signs of stabilization beginning in Q2'15,” it said in a note.

“We saw further signs of stabilization in August with gross gaming revenue in Macau coming in better than what Street expected, with mass gaming showing sequential improvement.”

UBS said it expects further declines in the first half of next year, before modest growth resumes in the second half.

“We expect the modest recovery to come predominantly from mass as we do not see VIP segment showing positive growth in Macau until back half of 2016E. We expect mass segment to start showing positive YOY growth by late Q1'16.”

Meanwhile, analysts at Wells Fargo say that based on channel checks through Sept. 20th, they expect GGR for the month to be down 30 percent vs. the prior estimate of -29 percent to -33 percent.

“With China's Golden Week holiday less than two weeks away (October 2-7), junket operators seem incrementally more optimistic heading into October,”

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