Macau is back according to October revenue figures

Macau is back according to October revenue figures

Wednesday, November 2, 2016 Posted by Andy McCarron
Latest GGR figures show 9% rise

Macau gross gaming revenues for October of MOP21.8bn exceeded analyst expectations and suggest the Chinese gambling enclave is now in an established recovery mode after more than two years of revenue disappointments.

Indicative numbers for the third quarter had suggested a stabilisation was underway and this was confirmed by the GGR figures for October from the Gaming Inspection and Coordination Bureau (CIMB) which showed a near 9% rise. This was despite the potential negative factor of the recent visit by Chinese Premier Li Keqiang and the arrival of Typhoon Haima which hit the region late in the month disrupting ferry services and flights.

Analysts at Union Gaming said the surprisingly upbeat figures suggested Macau was now at an inflection point.

“While we had originally expected only modest growth in October, GGR was clearly above expectations during the back half of the month and also handily beat consensus of around plus 6%,” analyst Grant Govertsen said in a note to clients this week. “Macau GGR growth rate has accelerated sequentially since August and we think is poised to show similar results in November.”

Govertsen noted that without these negatives, there was every possibility the October GGR growth figure might have been in the teens.

“This makes sense to us as the solid 7.4% growth in September, while enjoying the benefit of the first full month at Wynn Palace, only enjoyed a partial month of the heavily-marketed Parisian,” he wrote. “A strong Golden Week experiencing pent-up demand was also a big contributor to the month.”

All the share prices of the Macau operators received a boost from the news of the GGR rise. Wynn Resorts, which recently opened its aforementioned second property in Macau, jumped over 5% and Las Vegas Sands was up 2.8%.

The analyst consensus was that the strong numbers in October reflected an increase in mass-market gaming. Union Gaming suggested this was particularly the case with Sands China’s Parisian property which opened last month.

The analysts also suggested it was heartening that the recent incidents pertaining to the arrests of Crown Resorts marketing executives in China was “not having an impact on Macau’s VIP story.” “This is in line with our view that this incident has nothing to do with Macau or its operators,” Govertsen added. “In fact, incidents like this one are ultimately a net benefit to Macau. As non-Macau companies shy away from VIP activities in China, albeit perhaps temporarily, this should generally accrue to Macau's benefit.”

Though November will likely see the traditional end of year slowdown, the Union Gaming team predict further year-on-year growth for the month, potentially into double figures.

Totally Gaming says: The good news just keeps coming from Macau and it stands in stark contrast to the situation being spoken about earlier this year. What will be gratifying for the authorities in Macau and the Chinese government is that the renaissance appears to be driven by mass-market growth as opposed to VIP turnover. 

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