Operator News
China – First quarter revenues could fall in Macau
By Phil - 7 January 2019
Despite December being Macau’s 29th straight month of casino revenue increases, analysts are forecasting a dip in the first few months of 2019.
Morgan Stanley is predicting that GGR will fall by two per cent in the first quarter.
Morgan Stanley analysts Praveen Choudhary, Jeremy An and Thomas Allen, said: “The negative revisions mean more downside to stocks despite cheap valuations. While Macau is a structural growth story driven by low penetration and improving infrastructure, we see the cyclical slowdown continuing in 2019.
“We change our industry view to ‘in-line’ from ‘attractive’ due to tightened liquidity, full smoking ban pressuring VIP and premium mass growth in 2019, and potential decline in earnings before interest, tax, depreciation and amortisation year-on-year growth in the first quarter of 2019.”
“We now expect 2019 GGR growth of minus two per cent (was five per cent), driven by negative VIP growth of minus 6 per cent (was 0 per cent) and slower mass growth of two per cent (was nine per cent). Licence renewal remains a key overhang, and could keep valuation multiples lower than long-term averages. The first quarter of 2019 could see negative EBITDA growth year on year due to high base, higher opex and a smoking ban on premium mass and VIP areas.”
Macau’s casino revenues increased by 14 per cent last year compared to 2017.
