Slowly slowing

After a 22 per cent yearly increase in the third quarter of this year, gaming analysts at Bernstein estimate gross gaming revenue growth could ‘decelerate’ to a 12 per cent yearly increase in the last quarter of this year, representing a possible total of almost MOP67.67 billion

Analysts from brokerage firm Sanford C. Bernstein believe gaming revenues in the last quarter of this year will ‘decelerate’ to a 12 per cent year-on-year rise, or a 1 per cent quarter-to-quarter rise, a note yesterday revealed.
The estimates would mean gross gaming revenues in the fourth quarter of this year could reach around MOP67.67 billion (US$8.42 billion).
According to the note, this deceleration in the increase of gross gaming revenue is due to ‘more difficult comparisons’ with the respective previous period of comparison, and to an expected slowing down of the increase in gaming industry earnings before interest, taxation, depreciation and amortization (EBITDA) in the fourth quarter, to an estimated 15 per cent yearly or 4 per cent quarter-to-quarter rise.
However, the firm’s estimates for the results for the last three months of this year are still ‘slightly higher’ than previous ones, on account of registered ‘VIP strength’.
The group’s analysis of the Gaming Inspection and Coordination Bureau (DICJ) data indicates that, ‘the resilient strength VIP gaming sector has continued to surprise’ with the sector results going up by 35 per cent year-on-year in the third quarter of this year. Meanwhile, mass market results went up by 11 per cent yearly, the first time ‘VIP growth has outshined mass for the second quarter in a row’ since 2011.
Bernstein analysts also estimated gross gaming results would increase by 17 per cent annually in 2017, with the mass market segment going up by 12 per cent and the VIP sector up by 22 per cent.

Seeing the larger picture

The group also pointed out that it expected a considerable decrease in the annual growth of VIP in 2018, to only 1 per cent, with the sector in Macau to reach a compound annual growth rate of around 6 per cent until 2020.
‘We are cautious on VIP (even though 2018 VIP growth may be higher than we estimate today). Macro-economic slowdown (in particular money supply growth and real estate pricing) is likely to create headwinds for VIP, while the segment remains exposed to policy risks,’ the note stated.
Meanwhile, the mass market sector is expected to reach a compound annual growth rate of around 11 per cent until 2020, if hotel room capacity in Macau and local transportation infrastructure is improved.
‘Increasing overnight visitation and higher spend per visitor will be the key drivers of continued mass growth,’ informed the note.