Analysts predict gaming growth

Gaming analysts are providing their analysis of last week’s gaming results for the month of December and the year of 2016 through their forecasts for this year. While there is almost unanimous agreement that Macau is now past the worst and is on the road to recovery, there is variance over the predicted rate of gross gaming revenue (GGR) growth in 2017.

December marked the fifth consecutive month of year-on-year GGR growth, recording a gain of approximately 8 percent growth when compared to December 2015 and 5.5 percent growth from November 2016.

However for the full year, GGR remained 3.3 percent lower than in 2015 at around MOP223 billion, making 2016 the third straight year of lower revenues despite a 10 percent gain between the third and fourth quarters.

With the takeoff in growth during the second half of last year, Union Gaming Head of Asia Equity Analysis, Grant Govertsen, noted in a statement that the trough of gaming revenue appears to have occurred in June 2016.

“With the benefit of hindsight, June’s daily average of MOP529 million appears to have been the low water mark of the multi-year downturn,” evaluated Govertsen. “December’s average [daily revenue] of MOP639 million represents 21 percent growth relative to June.”

Govertsen also noted that the GGR growth recorded in late 2016 exceeded the growth of new hotel rooms and table games, indicating that spending is returning to the industry. “With more modest increases in supply in 2017 we remain upbeat about the growth prospects next year,” he added.

Analysts at Morgan Stanley, Sanford Bernstein and Buckingham Research Group forecast that GGR in Macau will register growth rates in 2017 of 10 percent, 8 percent and 6 – 8 percent, respectively.

Other analysts are more skeptical. Wells Fargo analyst Cameron McKnight wrote that he suspects there won’t be “prolonged, above-trend growth” since December’s 5.5 percent month-on-month growth was lower than the five year average of 6.9 percent.

It is worth noting though that based on unofficial gaming data gathered from sources within casino operators, analysts hold differing views on how the VIP and mass markets performed in December and what that will herald for 2017. DB