The local gaming industry remains on track for stabilisation, registering a 17.8 per cent year-on-year increase in total gross revenue for the month of February, amounting to MOP22.99 billion (US$2.87 billion), according to the official data of the Gaming Inspection and Co-ordination Bureau (DICJ).
This is also the seventh consecutive month that the industry has recorded a year-on-year growth in its total revenue – and the biggest – following a slump of 26 months from June 2014 to July 2016.
On a monthly basis, February’s gaming revenue went up by 19.1 per cent from January’s MOP19.3 billion. Meanwhile, accumulative gross revenue for the first two months of the year totalled MOP42.2 billion, up 10.6 per cent compared to MOP38.2 billion for the same period in 2016.
Describing the performance as ‘a truly remarkable beat’ in a recent research note, analysts at J.P. Morgan Securities (Asia Pacific) Ltd. estimated the revenue derived from the VIP sector had registered a significant growth of 20 per cent year-on-year in the month driven by ‘healthy tail-end demand post- [Chinese New Year] & strong volumes around Sun City’s 10-year anniversary event…’ They projected mass revenue had increased by some 15 per cent year-on-year as well, across both the Peninsula and Cotai plus both premium & grind-mass sectors. ‘Some players seemingly had skipped or postponed their trips for end-2016 or early- 2017, as CNY holiday started earlier this year from end-Jan (vs. mid-Feb last year); this has probably created a bigger swing into CNY given pent up demand,’ the analysts, led by D.S. Kim, wrote.
The firm added that the strong performance is also driven by CNY being the first major Chinese holiday following the recent ‘VIP turnaround’ and new property openings – which improved junket liquidity and increased room supply, respectively.
‘Thus, the industry was able to deliver the full potential of the current demand picture, in our view,’ they wrote.
Stabilisation
Meanwhile, an analyst at Nomura in Hong Kong, Richard Huang, perceives the industry’s revenues indicate that the gambling industry is showing consistent growth, with the last week of February particularly strong. “While it is hard to call the last week’s results a trend, the industry has showed clear signs of stabilisation,” he said.
An analyst with Bernstein in Hong Kong, Vitaly Umansky, said junket marketing events over the last week of February had led to a significant increase in VIP spenders. He cautioned March could see “a slowing VIP environment” versus February.
Gaming operator Galaxy Entertainment Group Ltd. recently reported a better than expected 2016 net profit and forecast double-digit gaming growth for 2017. It also said that for the first time in a decade overnight visitors to Macau this year had exceeded same-day visitor arrivals thanks to new hotel capacity.
Overnight Chinese visitation has grown following the opening of multi-billion dollar casino resorts in the third quarter of 2016 by Sands China and Wynn Macau.
The city’s large junket operators have reported improving revenues since the second half of 2016. These firms – which act on behalf of casino operators like MGM to bring in high- rollers – have been slammed by the corruption crackdown but broad consolidation has helped strengthen their positions.
Casino executives, however, are betting more on the durability of the mass market sector due to the steady growth of leisure visitors and the government’s aim to shift away from casinos towards more family friendly activities.
* with Reuters
