Aegis Capital Corp. sees the city’s gaming revenue growth marking the peak this quarter as boosted by the notable increase in revenue derived from the VIP market.
The firm’s analyst, David Bain, said in a research note on Monday that local gaming revenue growth may exceed 18 per cent year-on-year for this quarter, as a result of which the VIP market may surge by over 24 per cent year-on-year in revenue while the mass market is expected to see growth of at least 9 per cent year-on-year.
“We base our VIP or mass forecast on a 100 basis point VIP versus mass mix decline from 1Q17 with overall GGR slightly below month-over-month historicals. VIP growth was -16 [per cent year-on-year] in 2Q16 while mass table revenue was flat,” the analyst explained.
But Mr. Bain added that the projection suggests this quarter’s gaming revenue would be down by 4 per cent compared to the first quarter of this year. During the first three months, the industry generated some MOP35.5 billion in revenue from VIP Baccarat, up 16.8 per cent year-on-year, according to the official data of the Gaming Inspection and Co-ordination Bureau.
Forecasting VIP growth will maintain solidity in the third quarter and mass market growth will bottom but outpace VIP in the last quarter, the analyst raised his estimates for the whole year of 2017 from a growth of 9 per cent to that of 11 per cent year-on-year, expecting VIP growth will amount to 14 per cent and mass market growth will reach 8 per cent.
Pre-Golden Week calm
Another note from the firm notes the city is seeing a minor deceleration in revenue prior to Labour Day Golden Week starting next Monday.
“We expected minor [gross gaming revenue] deceleration as we [are] near the Golden Week holiday and as we came off the long Easter weekend holiday which benefited [Hong Kong] traffic to Macau,” the same analyst wrote.
According to Mr. Bain, April’s gross gaming revenue growth is currently trending at 17 per cent.
Citing reports and checks saying room bookings for the Golden Week holiday “are strong” the analyst believes revenue in May will post an increase of between 16 per cent and 20 per cent year-on-year.
Telsey Group holds a similar view, noting indications from sources from the past week “are perhaps somewhat less meaningful than the month taken in total, although we believe the data points to support of an ongoing positive trend line.”
In his latest note on Monday, Telsey analyst David Katz expects this month’s gaming revenue is running up from 16 per cent to 18 per cent, a decrease from 22 per cent a week ago.
“We believe the data point’s importance is diminished for two reasons. First, our sources indicate that the noted deceleration in GGR volume is the result of an expected lull ahead of the forthcoming Golden Week, which should re-accelerate this Friday,” he opines.
“The important holiday periods are integral to defining the trends of the market. Second, there are indications of table hold percentage driving results at different properties in both directions, which clouds the underlying current trends in the market,” the analyst added, claiming the firm is comfortable with its current estimates.
