Bank is “bullish” on Macau
Gross gaming revenues in Macau will continue to inch upward for the foreseeable future, according to a new study from J.P. Morgan, which has announced it is “bullish” on the world’s No. 1 gaming destination.
In the study, titled “Macau Gaming: Time to Invest in Industry Upturn for Years Ahead,” J.P. Morgan analyst Sean Zhuang cited three metrics that indicate “evidence for genuine, sustainable recovery” of the MSAR’s gross gaming revenues, reported the Macau Business Daily.
“Recent 2016 third quarter results demonstrated that the sector’s earnings power is much stronger than what the market had projected driven by a benign cost environment despite new openings as well as benefits from stronger mix and operating leverage,” the analyst stated.
Zhuang also said the uptick is not a temporary bump from new openings on the Cotai Strip, but signs of a genuine recovery in all gaming sectors, from VIP to mass market. “October was even better for all three segments, printing the best year-on-year momentum and absolute run-rates in over 20 months,” he said. Visitation has also been up since mid-2015, the analyst noted.
The study predicted a 9 percent increase in GGR in 2017 and 6 percent growth in 2018. J.P. Morgan said it looks forward to continuing positive trends in the coming years.
The Malay Mail reports the government is more conservative in its outlook for the jurisdiction. Chief Executive Fernando Chui agrees the economy will grow in the low single-digits in 2017, but added that authorities will continue to emphasize a diversified economy that is more tourism-driven and less dependent on gaming.
“We didn’t set a higher target than this year because we think there are still uncertain factors,” Chui said, referring to his forecast of 200 billion patacas (US$25 billion) in gaming revenues for 2017. A team of analysts surveyed by Bloomberg News set a median estimate of 230 billion patacas.
“The government has historically, and rightly, presented a conservative forecast as it relates to gross gaming revenue,” observed analyst Grant Govertsen of Union Gaming Group. “Based on trends we’re seeing today, we remain comfortable with our expectations for mid-single digit growth next year.”
