Gaming | Analysis: After sturdy March, analysts cynical on April

Analysts predict Macau gross gaming revenue will fare poorly this month, declining at a rate of between 2 and 8 percent. The prediction comes as March revenue came in much higher than market expectations, causing stocks of Macau casino operators to climb.

March recorded the strongest revenue posting of the year to date at MOP25.84 billion, according to information released Monday by the Gaming Inspection and Coordination Bureau, declining 0.4 percent year-on-year but up 1.85 percent from February. The result rounds out the first quarter with a 0.5 percent year-on-year contraction.

However, gaming analysts remain cautious on April, citing concerns about the irregularity of year-on-year comparison periods, in part due to the worsening of China-U.S. trade tensions starting from the second half of last year.

Japanese brokerage Nomura said that it expects a decline of between 3 to 8 percent in April “against a tough comp[arison]” period a year earlier.

Gross gaming revenue in April 2018 soared 27.6 percent year-on-year to reach MOP25.72 billion, but that was mostly attributed to an exceptionally weak first quarter in 2017. The average monthly take in 2018 stood at about MOP25.2 billion, while it is tracking at an average of MOP25.5 billion per month this year.

Union Gaming’s Grant Govertsen is forecasting gross gaming revenue for April to hold at the MOP25 billion level, slightly lower than last month. On that basis, he forecasts a 2.8 percent year-on-year decline by month-end.

Also citing difficult comparison periods, JP Morgan Securities (Asia Pacific) is betting on a 5 to 7 percent decrease, while Sanford C. Bernstein expects a contraction of between 2 and 4 percent year-on-year. Bernstein analysts suggested that although March showed signs of a rebound, it remains “unclear how sustainable” that would be in the coming months.

Prospects for the summer are mixed, partly because of traditionally weak June, which was the second-poorest month of both 2018 and 2017, and the lowest earner in 2016.

The consensus view suggests that the coming months will see a slight contraction or zero growth at best, while gross gaming revenues will likely pick up in the closing quarter of the year. For the analysts, a repeat of last year’s 14 percent growth is probably off the table for 2019, but moderate single-digit growth is attainable.