Macau is beating analysts at their own game.
Casino revenue in the world’s largest gambling hub rocketed past even the most bullish expectations in April, soaring 27.6 percent from a year earlier. The result was even more impressive as analysts had already revised their forecasts higher in the preceding weeks.
Figures from the Gaming Inspection and Coordination Bureau (DICJ) showed revenues rose 27.6 percent to MOP25.73 billion (USD3.18 billion) versus analyst predictions of 18-22 percent growth. April, often the weakest month of the first four of the year, grew second-fastest in 2018 after January.
April’s revenue shows a narrowing of the gap left by Macau’s two-year gaming recession, with the 2018 posting now only 18 percent lower than the peak April performance seen in 2014.
“Both segments of the market are working so well right now,” Grant Govertsen, analyst at Union Gaming Securities Asia Ltd., told the Times yesterday.
With respect to the VIP segment, Govertsen believes that the growth is reflective of a changing attitude among high-
roller visitors, who have become acclimatized to President Xi Jinping’s anti-corruption campaign and see the danger receding.
He said that there had been an “abundance of caution” that is now peeling away.
While high rollers continue to flock to the enclave, Macau is also seeing more robust business from casual gamblers. Gaming receipts from that so-called mass market grew 20 percent in the first quarter.
Accumulated gross revenue this year is at MOP102.24 billion ($12.6 billion), which represents a 22.2 percent increase year-on-year.
And gaming strength is likely to continue into May. The month has shown a higher posting than April every year since at least 2010, the earliest year for which DICJ data is available.
“The entire [gaming] market has been strong for the whole year,” said Govertsen when asked about the prospects for next month. “There is no reason why that shouldn’t continue into May.”
This cycle is different from 2013, when growth was led by high-stakes players, according to Lawrence Ho, Melco Resorts & Entertainment Ltd. chief executive officer. The industry has built new resorts to actively court the mass market that includes families and tourists, which bring in higher profit.
“This time around it’s both mass and VIP working side by side,” Ho said on Bloomberg TV. “Margin on mass is four times higher than VIP. The mass customers are more sophisticated and coming to a new city to experience the different aspects of it.”
Ho added that he expects full-
year results to come in strong for Macau operators.
MGM China Holdings Ltd. led gains in Macau casino operators this week. Its shares climbed as much as 6 percent to their highest intraday level since March 14 in Hong Kong. SJM Holdings Ltd. and Wynn Macau Ltd. gained more than 5 percent, while the benchmark Hang Seng Index initially declined 0.5 percent. MDT/Bloomberg
Japan on the radar, Hainan not a threat
IN AN interview yesterday with Bloomberg, Lawrence Ho said that while Japan continues to be a major target for his Melco Resorts and Entertainment, the casino entrepreneur does not see the development of the Chinese island of Hainan as a threat. “Other than Macau, I think Japan is the greatest [casino] opportunity, in the lifetimes of all the [gaming] operators,” he said. “That’s why we are committing so much effort toward it.” On the other hand, Ho said he doesn’t think that Hainan will ever develop casino resorts to compete with Macau. “I think the [central] government is looking at horseracing and lottery [activities]. We are still in a good position because I think Macau will always be the only place within China where gaming is possible. As long as operators like Melco continue to deliver on our promises, I think the central government and the Macau government will continue to support us.”
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