Macau Gross Gaming Revenue set to accelerate in Feb

Several investment analysts covering the Macau casino sector expect gross gaming revenue (GGR) growth – as measured in year-on-year terms – to accelerate in February compared to the previous month, due to a positive industry performance post Chinese New Year.

The Macau gaming sector reported GGR of MOP19.26 billion (US$2.41 billion) in January, up 3.1 percent in year-on-year terms. Some investment analysts say the growth rate in February could exceed 10 percent, based on unofficial industry returns for the first 12 days of the month.

“We estimate February revenues will be +8 percent to +12 percent year-on-year,” analyst Cameron McKnight from Wells Fargo Securities LLC wrote in a Monday note. “This is up from our prior estimate of +5 percent to +9 percent,” he added.

In a memo also issued on Monday, Japanese brokerage Nomura said it forecast February GGR in Macau of MOP21.5 billion, up 10 percent in year-on-year terms.

Telsey Advisory Group LLC stated that, based on current run rates, GGR growth in February could be of between 9 percent to 11.5 percent. “As expected the volumes have slowed sequentially as the Chinese New Year holiday period passed, but they remain meaningfully ahead of the prior year,” analyst David Katz wrote in a Monday note.

The Chinese New Year period is usually a peak season for Macau’s gaming industry as hundreds of thousands of mainland Chinese tourists take advantage of the week-long break to visit the city. This year, the Chinese New Year began on January 28, with the holiday period extending into the first days of February.

“Our channel checks indicate that Macau’s GGR month-to-date (February 1-12) was approximately MOP12 billion, indicating an average daily rate of MOP1,000 million month-to-date,” said Hong Kong-based Sanford C. Bernstein Ltd in a note on Monday. The brokerage’s analysts stated that the implied average daily rate for the week ended February 12 was around MOP814 million.

“The week ending February 12 was better than we had expected as the drop-off post Chinese New Year was not as extreme as we had estimated,” said analysts Vitaly Umansky, Zhen Gong and Yang Xie in their note.

They added: “We estimate an average daily rate of MOP580 million to MOP600 million for the remainder of this month, which would result in a February GGR in the range of MOP21.3 billion and MOP21.6 billion, +9 percent to +10.6 percent year-on-year (better than initially expected to due strong month-to-date performance).”

Some brokerages are less bullish regarding GGR in February, despite expecting year-on-year growth to exceed January’s performance. Both Aegis Capital Corp and the Buckingham Research Group Inc have set the higher end of their respective GGR growth ranges for February at 7 percent.