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Easter hangover

Analysts anticipate the gaming industry may suffer a slight deceleration following the Easter holidays, although they believe China’s travel restrictions against South Korea are still benefiting the MSAR market

Gaming analysts believe the city may experience a slight “deceleration” after the Easter holiday whilst maintaining predictions for a double-digit growth in gross gaming revenue in April.
According to Aegis Capital Corp. analyst David Bain, revenues derived from gaming tables reached MOP10.8 billion (US$1.34 billion) as of April 16, which suggests revenue growth was trending slightly above 20 per cent year-on-year.
However, the analyst noted that this growth is expected to suffer a “minor deceleration” in the remainder of the month, expecting the month could still finish with a “near or above the high-end of our estimate range” of 13 per cent to 16 per cent.
The Easter holiday is said to have benefited Hong Kong traffic to Macau. “Notably, one Macau contact told us that immigration lines from Hong Kong to Macau before the Easter holiday was [more than] 3 hours – the longest he has seen it around this part of the calendar in “years,” the analyst wrote.
He added that the recent travel restrictions enforced by Mainland China against South Korea is also continuing to benefit “higher-end Macau patron traffic.”
Meanwhile, a gaming analyst at Telsey Advisory Group, David Katz, holds a more positive outlook for the month, citing his industry sources, saying “gross gaming revenue trends in Macau for the month of April are running up approximately 22 per cent year-on-year.”
“Indications are that VIP hold has been mixed across the properties and therefore net neutral to the result, while head counts have remained strong in both Cotai and on the [Macau] Peninsula,” he added.
If Telsey Group’s estimates are correct, it would be the first time the local gaming industry sees revenue growth jump above 20 per cent since February 2014, when a year-on-year growth of 40.3 per cent was registered.

Picking winners
On the other hand, both firms believe Wynn Resorts Ltd. – the parent company of local gaming operator Wynn Macau Ltd. – would be one of the companies to see better results for the first quarter of this year.
“With the expectation that VIP is a key driver of the growth, we believe the revenue trends favour [Wynn] and to a lesser extent [Las Vegas Sands] and MGM based on their respective exposures to VIP business,” the Telsey analyst wrote.
“However, we consider the notion that the strength in VIP is contemplated by the market for first quarter results and all of the companies, Wynn Resorts, in particular, will need to clear a high bar in order to move higher in direct response,” he added.
Meanwhile, the Aegis Capital Corp. analyst estimates Melco Resorts & Entertainment Limited would see positive earnings for the first three months of this year as well.

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