Operator News

China – Macau celebrates a year of monthly gains

By Phil - 2 August 2017

Macau’s casino sector has celebrated a year of monthly gains with July’s GGR of US$2.86bn marking a jump of 29 per cent year-on-year, the biggest monthly increase 12 consecutive months of growth.

Analysts believe that a resurgence in VIPs spend, helped by improved junkets, along with the opening of new casinos is driving revenues.

GGR for the year so far came in at US$ 18.667m, an increase 18.9 per cent over the first half of 2016.
There were 39 casinos operating in Macau at the end of the first half of 2017.

JPMorgan Chase & Co analyst D.S. Kim said: “The VIP segment, for now, continues to see broad recovery across big and smaller junkets, a trend admittedly well above what we had envisioned.”
Others said the growth figures should be viewed with caution.

Bernstein’s Vitaly Umansky commented: “We continue to voice caution about the strength and volatility surrounding VIP. High hold rates in VIP along with continued volume strength creates volatility and lack of ability to more accurately forecast the monthly trend. The devil remains largely in the details regarding the breakdown between VIP and mass market and overall market share data and as such the weight of the overall GGR number needs to be taken with a bit of skepticism.”

Daiwa Capital Markets Hong Kong Ltd analyst Jamie Soo warned of further political crackdowns.

“Risk of heightening enforcement and potential policy pressures we had flagged have certainly not gone away. Some of the pressure on the gaming revenue does take time to manifest itself, and the seasonal impact of stronger mass numbers for summer months may very well smooth out the potential negative impact of this in the near term.”

The year hasn’t seen growth for every operator though.

SJM Holdings, the operator who once held the exclusive rights for casinos in Macau, posted a 12.9 per cent decline to US$122.3m for the first half.

SJM said GGR from its mass market tables fell by 0.5 per cent, while VIP GGR by 3.4 per cent during the same period.

The Group’s flagship Casino Grand Lisboa increased revenue by 7.7 per cent but the most damming figure for SJM is its loss of market share which now sits at 16.7 per cent.

Angela Han, of China Merchants Securities, said: “In general, our forecast for SJM’s third quarter profit is positive as the overall environment in Macau is recovering. The only risk that might weigh on the group’s profit is the suspension of its Grand Lisboa Palace project. It will be a huge uncertainty for SJM’s future performance.”