‘Just in line’
Gross gaming revenue for the month of December came in up 8 per cent year-on-year, according to the data posted by the MSAR’s Gaming Inspection and Coordination Bureau (DICJ). Despite the figure being the second highest gross gaming revenue recorded during the 2016-year, at MOP19.81 billion, the figure was ‘just in line’ with consensus estimates by analysts at JP Morgan, and the value ‘failed to continue its ‘beating streak’ since August,’ note the analysts. The figure for December trails only October’s figures, which amounted to MOP21.8 billion.
Average daily revenue was MOP639 million per day in November, note the analysts, as compared to MOP626 million seen in November and MOP598 million for the third quarter.
‘Post a heavily VIP driven November we believe the December result […] somewhat disappointing,’ note analysts at Deutsche Bank, referring however to the ‘challenging December’ for stocks of the local gaming operators as ‘likely’ accounting for the ‘majority of the slowdown/swifter deceleration’.
The group notes that for the month, the VIP was ‘impacted modestly by hold, given the difficult year-on-year comparison, though still generated a mid to high single digit y/y growth rate, with mass coming in similarly’.
Analysts at JP Morgan note that their sector view ‘remains bullish’, however point out that the industry has ‘entered a genuine upturn in demand, profits and cash-flows’. The analysts note that this should drive sustainable earnings upgrades, allowing investors more ‘predictable’ returns.
Total accumulated gross gaming revenue for the 2016-year was down 3.3 per cent when compared to 2015 figures, amounting to MOP223.21 billion, compared to the previous year’s MOP230.84 billion
Predictions by analysts at Deutsche Bank are for a 4.2 per cent year-on-year increase for January’s gaming revenue, however given that Chinese New Year will be falling in January this year ‘we believe a comparison with 2012 is more appropriate and note that January 2012 win per day was 6 per cent better than that of December 2011’. This leads the analysts to predict year-on-year growth for the month of up to 12 per cent.
Regarding the results from the last month of 2016, the analysts express the opinion that ‘the inability to improve from historical sequentials [is] a modest negative given the ramp up of two new properties in the market,’ commenting that ‘this shows that the respective ramps are coming primarily at the expense of others, rather than expanding the market’.
The analysts note that they ‘continue to see MGM as the best way to play the sector into earnings season’.
Bloomberg notes that in its survey of analysts, a consensus of a 7 per cent increase in gaming revenue for 2017 is expected, ‘in a recovery led by mass market players’. The group notes that, of the responses from the analysts, it found ‘macroeconomic and policy as among the risks facing Macau in the near term, along with new supply of casinos being planned by operators.’
December marks the fifth month of consecutive year-on-year growth in gross gaming revenue.