Analysts believe this month’s gaming revenue growth will be boosted based on strong performance exhibited during the first five days of Chinese New Year.
In its latest research notes, JP Morgan predicts that the city’s gaming revenue will increase by between 6 per cent and 10 per cent year-on-year for this month – from MOP19.5 billion (US$2.4 billion) one year ago – adding that ‘it’s likely to come in at the higher end of the range given the strong CNY’ whilst Wells Fargo projects a growth of between 5 per cent and 9 per cent year-on-year.
Last month, local gaming revenue amounted to MOP19.3 billion, an increase of some 3.1 per cent from the same month of 2016.
According to JP Morgan analysts, led by D.S. Kim, the strength of tail-end VIP demand this week would be another key determining factor in the sector’s performance this month as some VIPs only visit the MSAR after the holiday to avoid heavy traffic.
‘All-in-all, we are comfortable about our industry [gaming revenue] estimates, which will likely accelerate into good double-digit growths from March (and at least until July) on easy comps,’ the analysts at JP Morgan wrote.
Happy CNY
Claiming ‘Macau’s CNY was very happy,’ the brokerage estimates that the first five days of February have already raked in some MOP6.3 billion in gaming revenue, implying average daily revenue of some MOP1.26 billion.
‘No matter how we look at it, this is a very strong print: this is the best daily run-rate in two and a half years and the second highest CNY run-rate on record (only after 2014 CNY),’ they wrote, adding that the estimated average daily rate implies a growth of 30 to 50 per cent over the same CNY period last year.
Wells Fargo analyst Cameron McKnight and Telsey Group analyst David Katz hold similar projections, respectively predicting average daily revenue for the first five days of MOP1.2 billion to MOP1.3 billion and HK$1 billion to HK$1.2 billion.
‘The start to the holiday period positions the market for a strong month and a strong holiday period on a like for like basis,” Katz wrote, while McKnight expects the daily revenue rate will slow to some MOP700 million in the following week and MOP620 million for the remainder of the month.
Strong VIP
In fact, JP Morgan notes that the strength of the performance in the past few days is because ‘VIP demand came in particularly strong.’
It cited its checks with junkets that the run rates of the sector have increased by two to two and a half times year-on-year in the first five days, adding that mass is also projected to have recorded growth of 60 to 70 per cent year-on-year.
‘We understand overall VIP win-rate remained within normal levels, suggesting underlying demand was indeed very solid,’ they wrote, while Wells Fargo cited its contact as saying ‘VIP hold was about normal.’
