Macau (MNA) – Risks to the gaming sector in the Macau SAR are linked to the evolution of currency relations and policies, an updated forecast by research firm Bernstein shows on Tuesday.
The analysis suggests that the main risks to the sector are a ‘moderation in liquidity and money supply growth, slowdown in the real estate prices, further impediments to capital outflows from China, and a potential lack of FX [Foreign Exchange] (RMB vs. HKD) benefit that was evident in 2017.’ It also considers as a risk the possible return of the corruption crackdown campaign by the central government.
Estimations reflect a continued shift from VIP to Mass market as a main driver of growth. ‘We estimate a 2017E-2022E CAGR [Compound Annual Growth Rate] of 8 per cent for total GGR (Gross Gaming Revenue), 6 per cent for VIP and 11 per cent for Mass.’ The figures are supported by the opening of several properties in Cotai from next year to 2022.
In the short and medium-term, Bernstein sees VIP GGR growth losing steam, with the analysis suggesting that it will likely decelerate to 19 per cent year-on-year in Q4 and continue into 2018.
Bernstein estimates GGR growth in Q4 2018 will be set at 4 per cent, with VIP at -2 per cent, with Mass performing at 10 per cent.
Updated models in the latest report modified gaming operators’ stocks target prices. Melco changed to US$30.00 from US$24.50, Wynn to HK$26.50 from HK$20.50, Galaxy to HK$63 from HK$48.75, MGM China to HK$21 from HK$18 and Sands China to HK$40 from HK$35 old. Bernstein keeps SJM at HK$5.75.
