First signs of optimism

It’s like finding optimism in the midst of tragedy. Gaming figures for May made lots of headlines everywhere, after revenues dropped 37.1 per cent from a year ago, completing for the industry a whole year of falling revenues. Nevertheless, investors are seeing some light at the end of the tunnel. Daily gaming revenues increased for the first time in six months in sequential terms, the market is giving signs of forming a bottom, and the easier comparisons with 2014 could result in some good news in the forthcoming months. The yearly drop in May was already smaller than in April, 37.1 per cent against 38.8 per cent two months ago. Union Gaming noted that May also brought the first sequential rise in average daily table revenues in six months totalling HK$637 million, 2.7 more than in April. In the last four months, the daily revenues of casino here stood at HK$652 million, ranging from HK$620 to HK$677 million. Deutsche Bank sees some cause for optimism. ‘While the [May] results aren’t exciting on a stand-alone basis, we believe there is some optimism one can take from segment trends resembling those of April on a year-on-year basis, despite similar comps. We view this as another sign of a forming bottom’, wrote the bank in a note to clients yesterday. The breakdown for May gaming revenues was also revealed yesterday. The revenues coming from mass market decreased 28.4 per cent, while the high roller segment generated 42.8 per cent less than a year ago. June optimism Regarding June, Union Gaming sees this month as ‘transitional’ as ‘trends should improve given the easier comparison to June 2014’, the month that ignited the cycle of diminishing revenues. This could create at least better headlines in the coming months. “We could see a small tailwind for the market as new properties generally draw more customers, junkets try to be supportive, and initial marketing programmes roll out”, the brokerage said yesterday. If the average daily gaming revenues of the previous four months is maintained (HK$652 million) this month, this will mean that the total revenues for June will stay around HK$19.6 billion, a 26 per cent decrease, Union Gaming says. Way better than the current 37 per cent. On the other hand, Deutsche Bank is forecasting a 33 per cent decline in revenues in June, supported by a 38 per cent drop in the VIP segment and 26.1 per cent in mass floors.