Gaming | June growth lowered as mid-month data disappoints

Brokerage Sanford C. Bernstein has lowered its year-on-year growth expectation for June to between 1% and 3%, citing weaker than expected data in its channel checks during the first half of the month.

June has been a consistent poor performer in recent years, recording the second-lowest monthly take in both 2018 and 2017, and the lowest in 2016.

Meanwhile, revenue from gambling activities stood 1.6% lower in the first five months of 2019 compared to the equivalent period last year.

Analysts hold external macro-economic factors responsible for slowing growth in Macau gaming, including the ongoing China-U.S. trade war which has reportedly depressed demand in the VIP sector.

“Weaker-than-expected macro data for May, along with the recent heightened tension in U.S.-China trade relations however, casts uncertainty over the GGR recovery,” Bernstein wrote in a note this week. “If a trade war sustains over an extended period, it will likely pose a headwind to China’s economy and gaming spend from China’s high-net-worth individuals in Macau.”

However, “in the long run, improvements in transportation infrastructure, continued growth of the premium consuming class in China and the opening and ramping up of new casino resorts will support long-term growth in mass.”

The recent performance of the gaming sector shows signs of stabilization after years of double-digit growth in the sector before a deep contraction starting in 2014 wiped more than a third off annual revenues.

Most analysts expect modest single-digit growth or a minor contraction for full-year gross gaming revenue growth in 2019. The sector should perform better in 2020, they said, citing easing year-on-year comparisons.

Meanwhile, official data this week showed that the Macau government has collected over MOP48 billion during the first five months of 2019, representing about 49 percent of the conservative sum it had budgeted to collect for the full year. DB