Gaming slump continues

Gaming revenue for the month of July fell less than analysts’ expectations for the period, dropping 4.5 per cent year-on-year to MOP17.8 billion (US$2.2 billion) and marking the 26th straight month of declines in gross gaming revenues for the SAR, according to the latest data from the Gaming Inspection and Coordination Bureau (DICJ).
The results exceeded analysts’ expectations by a whole percentage point, as a 5.5 per cent year-on-year decline was expected for July, in line with Union Gaming analyst Grant Govertsen’s view of ‘declines becoming less worse’, and a significant improvement from June’s year-on-year 8.5 per cent decline.
Analysts at Bernstein note that the gross gaming revenue for the month, ‘picked up during the course of the month as the Euro Cup ended earlier in the month and summer holiday visitation began to improve.’
An eight per cent month-on-month increase in gross gaming revenue per day was seen, as July saw MOP573 million in average daily gross gaming revenue – just three per cent below the average for the last 12 months.
The last week of the month saw an increase in average daily revenue compared to the previous weeks, as noted by Bernstein analysts, due to ‘continued visitation and gaming volume sequentially improving’.
“We’re starting to see gaming revenue declines easing as visitation is showing signs of inflection after a downturn,” reported Bloomberg Intelligence analyst Margaret Huang.
Divided views
Opinions are divided on August as Typhoon Nida is expected to disrupt visitor flow both for the ferries and air traffic, leading Union Gaming analysts to predict ‘the first few days of August to experience lower-than-recent-normal daily gross gaming revenue’, with the expectation that the first three weeks of August will also be ‘negatively impacted by some number of higher value customers deferring their trips to Macau as they wait for the openings of Wynn Palace on 22 August and Parisian Macao on 13 September,’ notes the firm.
Analysts at Bernstein expect August gross gaming revenue to emerge from its decline and hit a two per cent year-on-year increase, as ‘the opening of Wynn Palace […] should provide a bump in gross gaming revenue, as will the pick up in seasonal base mass visitation.’
This sentiment is echoed by Grant Govertsen who predicts the ‘last week of August to be strong as it benefits from the opening of Wynn Palace and a likely boost in associated high end visitation.’
While Bernstein estimates revenue at MOP19 billion for the month, Govertsen foresees a ‘gross gaming revenue decline of three per cent to seven per cent in August, with the midpoint at MO17.5 billion,’ citing two fewer weekend days for the month this year. Govertsen expects positive revenue growth to return in September and ‘largely stay positive from that point forward.’ Positivity
Recent announcements such as those by billionaire Sheldon Adelson, who reiterated his faith that tourists and recreational gamblers are driving Macau’s growth, helped assuage worries and aid stock prices for operators such as Sands China, in advance of its Parisian Macao September 13 opening, just weeks after Wynn Palace’s on August 22, leading Bernstein analysts to rate the two stocks as Outperform. Also classified as such were Melco Crown, MGM China and Galaxy Entertainment, with local operator SJM the only to receive a Market Perform classification from the analysts.
‘While the Macau gaming industry will remain uncertain over the near-term, we view the industry as a secular growth story driven by the accelerating paradigm shift from VIP to Mass,’ note Bernstein analysts led by Vitaly Umansky.
Currently the DICJ is evaluating the Parisian Macao’s request for gaming tables at the property, while additionally the DICJ’s director, Paulo Martins Chan, said late last month that the bureau had received Wynn’s application for gaming tables and slot machines and is analyzing the request. The operator noted last week that it had applied for and is expecting to receive 100 additional gaming tables, planning to shift tables from its Macau property to have a total of 350 tables in Wynn Palace and 270 in Wynn Macau. Bernstein analysts note that ‘more than 100 tables is still a possibility,’ although the 100 table allocation is ‘likely accurate’.