Macau’s January GGR Fails To Meet Gaming Analysts’ Expectations

The sharp divergence between the projected casino gross gaming revenue (GGR) in Macau and the actual GGR recorded for January has surprised gaming analysts and industry observers.

According to latest data released by the city’s Gaming Inspection and Coordination Bureau, the gross gaming revenue in Macau was up by 3.1 percent in January. Analysts had been expecting that the growth in revenue to be in the region of 7 – 10 percent year-on-year. According to Christopher Jones, an analyst with the Buckingham Research Group Inc, the GGR for January was well below expectations of 8-9 percent.

He said that the poor show could have a number of reasons apart from the lack of demand. Jones said that some of the other possible causes for the low GGR could be due to low hold by casinos on VIP gambling, lower demand before the Chinese New Year which fell on January 28 this year and slow VIP gaming takeoff.

Jones added that the lower-than-expected VIP gaming was not surprising since earlier trends have shown that it typically picks up after mass players have exited the market.

In a statement Grant Govertsen of brokerage Union Gaming Securities Asia Ltd. said,

Based on the conversations we’ve had with junkets over the last few days, we understand that many didn’t see any meaningful volumes until January 30. As such, there was little VIP contribution to the January numbers

Macau registered a total of 770,024 tourist arrivals in the time period between January 27 and February 1 according to state data. The tourism bureau stated the growth was 6.7 percent over last year and that the growth was higher in the latter part of the festive week also known as the Chinese New Year Golden Week.

Jones observed that the visitation data was not a very accurate surrogate for assessing gaming revenue but added that the data available indicated that the Chinese New Year festivities got off to a late start this year. Brokerage Daiwa’s analysts Jamie Soo, Adrian Chan and Jennifer Wu have however hinted a downgrade in consumer sentiment pointing out that several hotel bookings made previously had been cancelled leading to them becoming available again.

According to analysts DS Kim and Sean Zhuang of JP Morgan Securities Asia Ltd, the initial revenue data for the first week of February, which is soon to be released would be a good measure of the existing demand as the period covers both a part of the peak holiday period as well as the tail-end demand for VIP gaming.

Adrian Sterne

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