VIP and mass both will see double-digit gains
Despite new measures to curtail ATM use in Macau—a clear sign that the Chinese government continues to look for excessive cash withdrawals for gambling—investment bank Morgan Stanley says it’s bullish on the city’s No. 1 industry.
Bank analysts have revised their projections for year-on-year gross gaming revenue growth from 12 percent to 15 percent for the year.
The Morgan Stanley analysts concede they are “concerned” about the new ATM rules including “Know Your Customer” facial recognition technologies, but believes the return of VIP gamblers and the growing mass-market segment are sufficient causes for optimism. The bank said it expects VIP revenue to grow 16 percent this year, and the mass-market segment by 14 percent, reported Casino.org.
“Gaming revenue growth has beaten market expectations since July 2016 amid China macro-economic recovery, resulting in Macau casino stocks outperforming the Hang Seng Index by 6 percent in the first half of 2017 and 26 percent in the second half of 2016, and we see positive earnings revisions continuing,” the analysts said.
Two-thirds of ATMs in Macau now have the facial recognition feature installed, said Macau’s monetary authority earlier this month.
The South China Morning Post also chronicled the rapid, unexpected return of high rollers. June marked Macau’s 11th straight month of rising gross gaming revenue following 26 consecutive months of year-on-year declines. The publication called the rebound “dramatic and dynamic, so much so that analysts called June’s 26 per cent rise to HK$19.4 billion a disappointment.” Union Gaming analyst Grant Govertsen, who has called for a “mass-led” recovery, has modified his language in the face of robust VIP play. Govertsen now calls it “mass-anchored,” the Post reported.
Investment bank Sanford Bernstein pointed to several factors for the good news: China’s economic improvement, “recovered” junkets, strong liquidity and an easing in the Beijing government’s anti-corruption campaign.
David Bonnet Delta State Holdings told the Post a “significant recovery is underway, primarily driven by incremental visitation due to the Wynn Palace and Parisian Macao openings. Revenue gains consistent with a long-term sustainable recovery are due to increased competition but are also helped by a revenue shift from VIP to mass casino business and therefore increased gross profit.”
More overnight stays—they’re up 14 percent this year according to the Macau government—shows stronger tourist enthusiasm for the territory.
