Gaming revenue dips 21.4 per cent but positive growth beckons

Casino revenue declined 21.4 per cent year-on-year during January to MOP18.67 billion (US$2.33 billion) from MOP23.75 billion, according to data published yesterday by the Gaming Inspection and Co-ordination Bureau (DICJ). The agony of Macau’s main industry has now been lingering for 20 months in a row but it may change this month. The decline in gross gaming revenue (GGR) for the first month of the year was in line with the expectations of industry analysts but there are different perspectives regarding February’s revenues. For analyst Grant Govertsen of brokerage firm Union Gaming there are signs that the market may have been growing for the last days of January. “Like last month, we believe the final tally beat consensus expectations by up to a couple of hundred basis points, which suggests the month ended on a positive note. Heading into the back half of January, GGR trends have been showing their normal seasonal slowdown in advance of Chinese New Year. We would highlight that January 2015 represents the most difficult year-on-year comparison to be faced this year”, Govertsen wrote. Growth of 2 per cent For this month, the analyst believes there is the chance for casino revenues to increase around 2 per cent year-on-year. If this happens it would be the first time since June 2014 that gaming revenues had grown in year-on-year terms. “We think that February’s results could look something like October’s MOP20 billion, which would result in a 2 per cent year-on-year growth. We don’t think this is a stretch as GGR has exceeded MOP18 billion in each of the last two months despite not having a traditional holiday benefit”, he wrote. Union Gaming justifies the optimism for February by “the typical holiday GGR boost associated with Chinese New Year”, the fact that “most of the pre-Chinese New Year seasonal slowdown would have already been felt in January”, and because “February 2016 gets the benefit of one extra day thanks to leap year”, it explained. The low base of comparison with February 2015, when gaming revenues declined 40 per cent year-on-year to MOP19.54 billion are also mentioned by the Deutsche Bank analyst Karen Tang. However, she does not believe that the overall market will actually grow. In her view, the exception is the mass segment. “For February, we expect the super low base will narrow February 2016 GGR decline to only minus 5 per cent year-on-year since February 2015’s GGR fell a sharp 40 per cent year-on-year given a late Chinese New Year (19 February last year). For a single month, February mass GGR growth might even turn positive”, she said. If on one hand the view for February has caused different opinions, both brokerage firms agree that any positive effect for February will be short-lived and that negative trends will return in March and April.