GGRAsia – Some shine off Macau Golden Week despite beat on visits

Some shine off Macau Golden Week despite beat on visits

Oct 10, 2017 Newsdesk Latest News, Macau, Top of the deck

The aggregate number of visitor arrivals to Macau in the eight-day October Golden Week holiday was up 10.3 percent year-on-year, despite a slow start in the first four days of the festivities.

The tally recorded by the Macao Government Tourism Office (MGTO) for the period – based on Public Security Police data – was 920,631 visits. The number of mainland Chinese visitors in the eight days was 696,636, an increase of 11 percent year-on-year.

MGTO had said before the holiday started it was expecting visitor numbers to rise by about 4 percent to 5 percent from a year earlier.

Despite the arrivals tally beating Macau government estimates, there was some disappointment from the investment community regarding the likelihood that the year-on-year growth in casino gross gaming revenue (GGR) for Golden Week actually lagged the year growth trend, which was running at 18.8 percent as of September 30.

“Golden Week wasn’t as golden as what we’d hoped for,” said a Monday note from analysts DS Kim and Sean Zhuang of JP Morgan Securities (Asia Pacific) Ltd.

They estimated casino GGR per day for the period probably grew by 7 percent to 10 percent year-on-year, amounting to MOP1 billion (US$124.4 million) to MOP1.1 billion per day.

“We believe performances of VIP and mass were broadly similar, with underlying volumes growing at high-single-digit year-on-year (versus 2016 Golden Week),” they wrote, adding the caveat that data from industry consultant sources wasn’t available at the time the note was issued.

Mid-Autumn Festival

“In hindsight, we think the Mid-Autumn Festival (which fell right in the middle of this Golden Week) has had bigger-than-expected negative impact, as some gamblers could’ve shortened the trip to stay at their home town for family dinner (i.e., either finishing the trip earlier or coming to Macau later than they would’ve done otherwise),” added Mr Kim and Mr Zhuang.

October’s Golden Week period included China’s National Day on October 1, which this year fell on a Sunday. China’s State Council declared the 2017 holiday period as running for eight days from October 1 to 8, as it included the lunar calendar-based Mid-Autumn Festival, which this year fell on October 4.

Japanese brokerage Nomura noted – as acknowledged by JP Morgan – that judged week on week, casino GGR had likely risen by as much as 46 percent during Golden Week.

Nomura stated in its Monday memo: “Initial survey results showed that Golden Week started off quieter than we expected, which we believe was due to 1) a tough year-on-year comparison, with estimated GGR per day through the first ten days of October last year (MOP975 million) up approximately 20 percent year-on-year; 2) elevated expectations, given the 19 percent year to date lift in GGR through September; and/or 3) some residual weather-related slowdown from Typhoon Hato, which may have caused mainland visitors to cancel trips to Macau.”

Brokerage Sanford C. Bernstein Ltd said in Monday note that its checks of industry unofficial data indicated an average daily rate for GGR during Golden Week of MOP1.06 billion, which it said was “in line” with its estimates.

“According to our channel checks, VIP volumes were weak during the first half of the week, but picked up to mid-teens year-on-year growth for the whole week largely driven by high VIP hold rate,” wrote analysts Vitaly Umansky, Zhen Gong and Cathy Huang.

“Mass GGR was up by in the range of low-single digits of percent year-on-year. While GGR was generally in line with our expectations, the mix was poorer than we had expected and mass was disappointing,” they added.

David Katz of Telsey Advisory Group LLC said in his Monday memo: “The current month should be particularly indicative of the trajectory of the market, given that the inclusion of full operating months for both … Parisian [Macao] and Wynn’s Palace create a fair comparison.” The Parisian Macao, promoted by Sands China Ltd, was launched in September last year; and Wynn Macau Ltd’s Wynn Palace opened in August last year.