Bernstein: “Both VIP and Mass have weakened” post-CNY
After a welcome bump in visitation and revenues in February, Macau casinos are down again, according to analysts who have already forecast March will go out like a lion.
Thanks to the Chinese New Year celebration and an extra day during Leap Year, the Gaming Inspection and Coordination Bureau said the city’s casinos collected $2.4 billion last month, a decrease of 0.1 percent for the lowest drop in 21 months.
Citing figures from Sanford C. Bernstein, the Asia Gaming Brief reports that March GGR is estimated at MOP 16.4-17.6 billion, for a year-on-year decline of 18 percent to 24 percent. Bernstein had anticipated a 10 percent YOY drop for the month.
Deutsche Bank echoed Bernstein’s disappointment. In a note, analysts Carlo Santarelli and Danny Valoy wrote, “Simply, if the market is recovering, then sequential (and) seasonal trends should be improving. This is difficult to see in looking at February alone, and the January/February combined two-year stack shows just modest improvement from the prior-period two-year stacks … We think March is important, and we view down 7 percent year-on-year as a key level.” Deutsche Bank had predicted that GGR for March would see a 10.1 per cent year-on-year decline.
To no one’s surprise, the VIP sector continues to struggle. According to CalvinAyre.com, Lam Man Pou, chairman of junket investor Iao Kun Group Holding Company Ltd. said 2015 was “difficult” and 2016 “will also be a challenging year for VIP gaming in Macau.” Turnover in January and February was down 44 percent; the company projects total turnover at its five Macau VIP rooms of $3.5 billion to $4.5 billion for the year.
Jorge Neto Valente, president of the Macau Lawyers Association, says the recent arrest of former Public Prosecutor General Ho Chio Meng is “shaking” public confidence in the system, according to the Macau Daily Times. “How do I know it shakes? Because it shakes my own confidence,” he said. “If it shakes mine, it will also shake the confidence of other people. I am seeing, unfortunately, situations that are almost sinister and others that seriously affect the image of the legal system of Macau and the judicial organization.”
Earlier this month, Ho was reportedly charged with fraud, abuse of power and document forgery in a case that also involves other government officials. The Commission against Corruption has not formally identified the accused, but says they took bribes amounting to 44 million patacas (US$5.5 million) over a 10-year period.
Alarmingly, the South China Morning Post and other local media report that Hong Kong triads continue to “enjoy ties with Macau’s VIP industry.”
Casino.Org News cites a report from the City University of Hong Kong suggesting that Macau’s VIP rooms are still “the main drivers of economic profits for the triads.” But the criminal gangs “have readjusted their traditional intrusive role and reinvented harmonious business strategies to suit the market reality.”
Macau’s Gaming Inspection and Coordination Bureau says it is unaware of triad influence in the VIP rooms.
