GGR growth of 6 percent in 2018
Sanford C. Bernstein analysts say gross gaming revenues in Macau will grow 12 percent in the fourth quarter of 2017, down from the year-on-year spike of 22 percent in the third quarter.
GGR growth for the year is estimated at 17 percent, say analysts Vitaly Umansky, Zhen Gong and Cathy Huang, and will slow to 6 percent in 2018. According to a report in Inside Asian Gaming, the analysts say GGR will drop even further in 2019 with a dampening of VIP play.
“Our 2017 estimate for mass is +12 percent year-on-year while our estimate for VIP year-on-year growth is +22 percent,” the analyst team said in an investor note. “For 2018, we estimate 6 percent GGR growth followed by slower growth in 2019 (partly on back of the smoking ban), before higher mass growth picks up in 2019. Our long-term forecast is for mass to achieve a CAGR of ~11 percent through the end of the decade and for VIP to have a CAGR of ~6 percent.”
Macau’s recent recovery has been led by VIP play, which grew 35 percent year-on-year in the third quarter to MOP$38.7 billion (US$4.85 billion) and accounted for 57.7 percent of all casino revenue. But mass market continues to loom as key to the industry’s long-term base.
“Increasing overnight visitation and higher spend per visitor will be the key drivers of continued mass growth,” Bernstein said. “We are cautious on VIP, even though 2018 VIP growth may be higher than we estimate today. Macro-economic slowdown (in particular money supply growth and real estate pricing) is likely to create headwinds for VIP, while the segment remains exposed to policy risks.”
The Macau direct taxes on gaming increased 17.5 percent year-on-year in the first nine months of 2017, shows data from the city’s Financial Services Bureau. Macau took nearly MOP68.64 billion (US$8.54 billion) between January and September, compared to MOP58.40 billion collected in the same period of 2016.
Looking into the future, newly appointed lawmaker Davis Fong says he will play a part in granting new licenses for Macau’s Big 6 gaming concessionaires. MGM and SJM’s licenses will expire in 2020, while those of Sands, Galaxy, Wynn and Melco Resorts will last until 2022. “2020 is quite a critical year for Macau, so I am expecting the government will initiate some actions to open the bid,” said Fong.
The licenses will not renew automatically in 2020 and 2022, but they can be extended for a maximum of five years if the government takes no action.
