GGRAsia – Macau 2019 GGR slow start may send Jan negative: analysts

Macau 2019 GGR slow start may send Jan negative: analysts

Jan 08, 2019 Newsdesk Latest News, Macau, Top of the deck

Subdued levels of daily gross gaming revenue (GGR) in Macau’s casinos in the opening days of 2019 have prompted brokerage Sanford C. Bernstein to suggest January’s growth rate might slide into negative territory.

In a note issued on Monday, the institution forecast GGR this month would be somewhere between 2 percent lower and 2 percent higher than a year ago.

If a so-called negative growth rate were recorded, it would be the first time since mid-2016 that monthly GGR had failed to expand. In July of that year, GGR was MOP17.77 billion (US$2.21 billion), down 4.5 percent on the July 2015 figure of MOP18.62 billion.

The Sanford Bernstein note said channel checks indicated Macau casinos recorded GGR at the rate of about MOP850 million a day in the first week of this month, about 12 percent more than in the equivalent period last year. However, the analysts warned that the overall GGR number needed to be treated with “a bit of scepticism as weekly channel checks have proven to be less than accurate,” and the actual numbers “volatile”.

The brokerage said other data indicated persistent weakness in the Chinese economy, which might mean smaller volumes of money would be bet in Macau casinos.

“As we have been highlighting, the macro environment in China is creating headwinds risk for GGR growth in Macau in 2019,” the note written by analysts Vitaly Umansky, Eunice Lee and Kelsey Zhu said.

The Instinet stockbroking arm of Nomura foresaw this month’s GGR being anywhere from the same as a year ago to 5 percent greater. A Nomura note issued on Monday gave an estimate of about MOP850 million for average daily GGR in the first six days of this month – the same number as the Sanford Bernstein estimate.

“We believe GGR-per-day benefited from a slightly higher weekend-to-weekday proportion, which we estimate positively impacted daily GGR by about MOP17 million, assuming weekend demand at about 1.5 times that of a typical weekday,” the note said.

Looking ahead, Nomura remarked: “GGR per day typically increases around 6 percent to 7 percent for the combined January and February period versus December, which would translate into a daily GGR range of about MOP900 million to MOP 920 million for the combined period this year. However, we expect much better year-on-year performance in February than we do in January,” wrote analysts Harry Curtis, Daniel Adam and Brian Dobson.