Gaming | Brokers optimistic about region’s mass GGR growth

As Wynn Palace opened yesterday, gaming analysts’ consensus is that the region’s gross gaming revenue will grow by 7 percent yearly, Deutsche Bank reported.
Sands China has announced that the ratio of promotional expenses to gaming revenues had a 1 percent increase from the first to second quarter, thus the broker concluded that it could reflect in further market competition as Steve Wynn’s second local resort launches.
Echoing the sentiments, Merril Lynch’s analysis suggests that the region’s gaming stocks are likely to see a sustainable recovery in the second half of the year, believing that the last half of the year would see an 11 percent growth.
Merril Lynch forecasted more mass visitors in the summer holiday period would contribute to mass revenue growth in the third quarter, adding that Wynn Palace and The Parisian Macao would bring more tourists into the region.
The analysts are expecting mass revenue in July to see high single-digit growth, with third quarter growth at 8.6 percent quarterly and 8.8 percent yearly.
Although the broker noted that VIP room performance would still be subdued, it anticipates that the long weekend of Mid-Autumn festival and “golden week” on October 1 would drive up mass revenue in the coming two months.
According to banking firm Goldman Sachs, Wynn Palace’s hotel rooms for the “golden week” during October are already fully booked but some rooms are still vacant for the first three weeks in September; “historically a weak time,” the analyst reported.
Meanwhile Goldman Sachs projected that for every 10 percent increase in mass-market table yield, Wynn’s group EBITDA would increase by 5 percent. It adjusted group EBITDA for 2016-2018 by negative 3 percent to 1 percent, with target price lowered from USD16 to USD15.4, but keeping a ‘buy’ recommendation. LV