Macau’s Casino GGR Growth Is ‘Solid’ Despite Less Than Expected Revenue

Macau, China city skyline at dusk.

Figures from analysts suggest that Macau’s casino gross gaming revenue (GGR) growth trend remains “solid” despite falling short of expectations in recent months.

In March, it was reported, that while gambling revenue in the autonomous region on the south coast of China had risen 5.7% in February, that was less than what analysts had been expecting, Reuters reported last month. Analysts had projected revenue growth between 7% and 12%.

Yet, while revenue rose to 24.3bn patacas (£2.2bn; $3.02bn), it was still far off the 2014 high of 38bn patacas (£3.5bn; $4.7bn).

Macau’s gambling industry gains strength

New figures for June suggest that so far the month has been positive for Macau’s GGR growth. While the estimates are based on unofficial industry returns, the analysts claim that the growth is expected because of an upward trend in the mass-market segment, reports GGR Asia.

JPMorgan Securities (Asia) Ltd analysts DS Kim and Sean Zhuang said: “Based on our checks, gross gaming revenue (GGR) for the first ten days of June was estimated at circa MOP8.5bn [US$1.05bn], translating into [about] MOP850m (£78.9m; $105.6m) per day.”

They added: “This is better than May’s MOP822m (£76.3m; $102.1m) per day (which was dragged by poor VIP luck), helped by two full weekends during the 10-day period.” In May, year-on-year, GGR in Macau increased by 12.1%, reaching MOP25.49 billion (£2.4b; $3.1b). This was reportedly due to a 27.6% expansion in April.

The analysts indicate that “mass demand seems to be tracking strongly, up modestly month-on-month or over 20% year-on-year, showing no sign of slowdown despite the recent UnionPay issue.” The reference is to the fact that authorities in the region reportedly told financial institutions to sort out the illegal use of UnionPay cards that are being used to avoid exchange controls.

In addition, China has been trying to stamp out illicit capital outflows. This is noted by the fact that banks have withdrawn cash-back machines from pawnshops and jewelry shops inside casinos, which could create the fear that the result will be a slowdown in gaming revenue growth. The fact was highlighted earlier this month when a report from Bloomberg said that Macau casino shares had dropped for four consecutive days as a result.

Notably, though, according to Japanese brokerage Nomura, the recent efforts on UnionPay terminals “have had little (if any) near-term impact on overall demand … as evidenced by last week’s strong GGR number”, the GGR Asia report adds.

The analysts, Harry Curtis, Daniel Adam, and Brian Dobson, said: “By segment, month-to-date we estimate that average daily VIP volume is [about] 3% lower sequentially versus the average in May, VIP hold percentage is [circa] 2.85% (versus the ‘normalized’ hold range of 2.7% to 3.0%), and mass GGR/day is tracking [circa] 2% to 3% higher versus May.”

They further stated that, assuming GGR for June slows “in line with the trailing six-year median”, the GGR for the month could be around MOP22 billion (£2b; $2.71b) to MOP24 billion (£2.2b; $3b). This would represent a 10% to 20% year-on-year growth.

Macau’s nonagenarian casino tycoon retires

Yesterday it was reported that Stanley Ho Hung-sun, the founder and now chairman emeritus of SJM Holdings, has officially retired. Ho, who turns 97 in November, still controls 14 of the 30 operating casinos in the Macau territory, including the Grand Lisboa.

According to a report from the South China Morning Post, Ho’s half a century grip on the industry has created the world’s biggest gambling hub. However, his retirement comes at a time when China is cracking down on money flowing out of the country and international gaming concessionaires.