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June gross gaming revenues fall 8.5 pct y-o-y

Analysts see decline of gross gaming revenue in June as a ‘slight improvement’, while predicting a decrease in July between 8 and 10 per cent.

Macau’s gross gaming revenue decreased by 8.5 per cent in June year-on-year, according to the latest Gaming Inspection and Co-ordination Bureau (DICJ) data.
In total, revenue decreased from MOP17.4 billion (US$21.7 billion) in June of 2015, to MOP15.9 billion in June this year, the lowest monthly value seen since September 2010.
In a first quarter yearly comparison, the first three months of 2016 saw an 11.4 per cent decrease to MOP107.8 billion, according to the DICJ data.
For analysts at both Bernstein and Wells Fargo, the revenue figures in June were ‘slightly better’ than their predictions that the decrease could follow the general 11 per cent decline in the first half of 2016.
Bernstein analysts remain ‘positive’ that gross gaming revenues will pick up in the second half of the year due to ‘improvements in transportation infrastructure and the opening of large scale integrated resorts between 2015-2018’.
Wells Fargo on the other hand, predicts that July will see a decline of between 8 and 10 per cent, a more negative outlook than the general consensus of a 5.8 per cent year-on-year decrease.
In terms of average daily revenues, Bernstein reported an 11 per cent decrease in June month-to-month – to MOP593 million.
However it also noted a strong end of the month for June, with the last four days seeing a 23 per cent increase from the rest of the month – to MOP595 million.
Wells Fargo now expects a 5 per cent growth in average daily revenues in July to MOP550 million.
Government not very positive
A more negative outlook was expressed in a release by the Secretary for Economy and Finance Lionel Leong Vai Tac, where it was stated that the ‘gaming sector adjustment would persist for longer, with high probabilities that the gross gaming revenues reported in the second semester of the current year continue their negative growth.’
However information within the release left open the possibility that the degree of decline could slow for the rest of the year.
The release also stated that in the first semester of the year, the mass market represented 53.1 per cent of total gaming revenue, a 10 per cent increase from last year.
VIP gaming revenues dropped 17.3 per cent year-on-year for the month of June.
Reflecting the views of Bernstein and Wells Fargo, the release by Secretary Lionel Leong stated that the opening of Wynn Palace in August and The Parisian in September would be ‘beneficial for the increase of attractions in the tourism market in Macau.’
In terms of contributions to the government budget, the first semester of this year saw an average monthly contribution of MOP18 million, with the government predicting the gaming sector would contribute a total of MOP200 billion, around MOP16.6 billion per month, by the end of 2016.
New properties to the rescue
Both analyst firms see the new openings by gaming operators in the second half of the year as being crucial for an improvement in the general economic outlook.
Analysts at Bernstein see the Wynn Palace opening in early August as a ‘game changer’ for the company, predicting that if the VIP sector improves faster than expected, Wynn will be in a privileged position to explore their rebound.
Regarding the September opening of Las Vegas Sands’ Parisian property with its 3,000 new rooms, the analyst firm believes it will ‘do well with Chinese customers.’ China at risk
Wells Fargo considers China’s economic downturn a major risk factor for the future of the gaming sector in the territory.
‘GDP forecast erosion, loss of stock markets indexes, decline in real estate values, a decrease in consumer confidence and a decrease in disposable income,’ were all factors of the mainland economy that the analyst firm saw as having an effect on the number of visitors to the territory.
Expansion of the smoking ban in casinos – with the elimination of smoking lounges – and an inadequate number of foreign labor visas were also considered as major factors in the economic downturn.

Lawrence Ho keeps bet on Studio City
Wells Fargo took note of a statement by CEO of Melco Crown Limited Entertainment (MPEL), Lawrence Ho to the press – that he is in “no rush” to buy out the 40 per cent stake in Studio City.
Ho had previously stated his lack of satisfaction with Studio City’s first quarter profits being below expectations of US$195 million.
“We just need to do a better job at marketing ourselves and bundling offers – it’s not rocket science,” Ho told Barron’s Asia website in regards to Studio City missing its target in the gaming mass market and promoting non-gaming activities.
Ho also sees the Macau market as becoming “super competitive” between the six gaming operators in the future.