Gaming | Weakest revenue growth since August 2016

Macau’s gaming industry revenue increased by 2.8 percent year-on-year to MOP21.95 billion (approximately USD2.72 billion) in September, the Gaming Inspection Bureau announced. It is the weakest growth seen since August 2016.

Results were affected by the impact of super typhoon Mangkhut, which hit Macau on September 16. The storm forced a 33-hour shutdown of casinos – the first-time resorts have closed since gambling licenses were first distributed in 2002.

The typhoon added to casino operators’ woes over recent months. Analysts have lowered their estimates for this year and 2019 as a weakening yuan, China’s economic slowdown and escalating trade tensions with the U.S. threaten to derail 26 straight months of revenue gains in Macau. The benchmark gauge of Macau casino stocks is down 36 percent since the end of May due to worries that high rollers are easing up on their bets.

“The typhoon Mangkhut and casino suspension were the obvious drag, but underlying demand in VIP was softer than expected as well,” JPMorgan Chase & Co. analyst DS Kim wrote on Monday. “Though not a big surprise, this does suggest the market will need to lower VIP expectations for the fourth quarter and next year.”

Key junkets did not see improved volume after the Mid-Autumn Festival in late September following the typhoon, and VIP growth was negative for the month, Morgan Stanley analysts Praveen Choudhary and Jeremy An wrote on Monday.

Analysts forecast that the weakening trend will continue, with October growth predicted to be 5 percent. The industry is closely watching the influx of tourists during Golden Week as an indicator for the rest of the month. The holiday, which started on Monday, is considered to be peak season for Macau.

The accumulated revenue in 2018 has reached MOP224.06 billion (about USD27.79 billion), 15.9 percent higher than the same period of 2017.

Macau’s monthly gaming revenue registered a 1.1 percent year-on-year rise in August 2016, ending a 26-month industry slump. Since then, the monthly revenue has maintained a year-on-year growth as of September, which recorded the 26th monthly increase.