Gaming | Fischer says mass market will be able to grow

Aaron Fischer presents at the G2E press preview at Studio City

Aaron Fischer, gaming analyst at Hong Kong-based brokerage and investment group CLSA argued that Macau is “still in good shape,” despite the gaming slump. He also added that the new game in town will be a battle for market share among the MSAR’s new properties.
The analyst told reporters yesterday at the Global Gaming Expo Asia (G2E) press conference that CLSA’s outlook for the VIP market in the future was not optimistic. “Our outlook is still negative for VIP,” he said. “We think that it peaked in 2013 and that it won’t recover. So we generally remain cautious on VIP, but the mass market can grow [in the future].”
The opening of four new resorts in Macau focusing on the mass-market – the Wynn Palace, MGM Cotai, The Parisian and Studio City – represents a significant shift in the industry.
CLSA predicts that, while the first half of this year will demonstrate the market weakness typical of recent months, the second half of 2016 is likely to show positive growth as new entrant properties open to the public.
Generally, the analyst firm forecasts that the newer properties will increase their market share in the near future at the expense of the older properties.
“The new resorts are likely to gain in market share, while the older properties are expected to lose market share in the near future,” Fischer said.
“It’s a fight for market share from now on,” he added.
His comments come at a time when Macau is facing its worst existential crisis in its gaming history. International media reports have been particularly damning in this respect, implying that Macau’s gaming fortunes are experiencing a perpetual downward spiral, exacerbated by structural issues from the mainland.
The worst of these structural problems is usually accredited to President Xi’s anti-graft campaign, which has frightened away cautious high rollers from Macau’s gaming tables.
However, Fischer says that “it’s important to remember that Macau is still in very good shape,” even if the VIP market is not expected to recover to its previous heights. “Macau’s gaming operators are still earning reasonable profits; nobody needs to feel sorry for them.”
A good measure for this is Return On Invested Capital (ROIC), which Fischer says has historically been very impressive in Macau. The gaming operators saw ROIC peak in 2013 at 50 percent, according to the CLSA analyst, which meant that it took two years of operations to repay the initial investment.
Even though analysts predict that this will continue to fall, and eventually stabilize at around 20 percent, it will still compare favorably with other industries.
Aaron Fischer conducted the presentation at the press preview for the Global Gaming Expo Asia event, which will take place in Macau from May 17 to 19.
“G2E serves as a powerful showcase for a comprehensive range of solutions [relating to the gaming industry]”, said Josephine Lee, vice president of Reed Exhibitions, Greater China – the company behind the organization of the exposition.
“Today, G2E Asia is three times bigger than when it was launched in 2007. Furthermore, as we mark the show’s ten-year anniversary, we are proud to confirm that the number of visitors to the show has skyrocketed by 230 percent since its launch,” Lee revealed.
Organizers say that over 95 percent of Asian casino operators send representatives to G2E Asia in order to network with industry thought-
leaders and to source potential suppliers.
This year, the show will host 180 exhibitors, 25 percent of which are new and 80 percent of which are from overseas. The hike in numbers continues on from last year’s record-breaking statistics, where 9,867 visitors from 79 countries and regions attended, along with 161 exhibiting companies.
G2E Asia will also welcome the launch of several extension events tied to the annual exposition. A “Macau Pavilion” will feature as an international platform for local SMEs to develop more business opportunities.
It will work in conjunction with another event – the “Retail Forum” – which chairman Vincent Tung, of the Council Board of Macau International Brand Enterprise Commercial Association, says aims to transform Macau into an international shopping destination for tourists. Staff reporter