Macau gaming returns to modest growth in May

An attendee handles cards on a poker table during the G2E Asia in Macau (Bloomberg)

Macau casinos returned to growth in May, yet the modest revenue gain is a sign that the world’s largest gaming hub still faces headwinds from regional competition and trade-war uncertainties.

• Gross gaming revenue for Macau casino operators was 25.95 billion patacas (USD3.2 billion) in May, up 1.8% from a year earlier, according to data from the Gaming Inspection & Coordination Bureau (DICJ) released today (Saturday). That was slightly worse than the median analyst estimate of a 3% increase, and follows declines in March and April.
• Accumulated revenue from January fell 1.6% to 125.7 billion patacas.

Key insights

• Despite May’s gains, a full recovery remains elusive for Macau’s casinos. A slowing Chinese economy and trade war have loomed over the territory this year, ending more than two years of uninterrupted revenue growth as the high-roller segment has weakened.
• The stagnant results reinforce another trend that is worrying analysts: many high rollers are being lured away by attractive rival gaming spots. Suncity Group’s planned opening of a Vietnam resort, and Melco Resorts & Entertainment’s deal with Crown Resorts attest to the growing significance of regional diversification.
• As the trade war with the U.S. drags on, analysts aren’t optimistic for the rest of the year. While the mass-market segment has shown some strength, analysts still forecast an overall drop in revenue for the full year, citing geopolitical uncertainty.

Market performance

• Macau casino stocks have been dropping amid the more pessimistic outlook. The Bloomberg Intelligence index of Macau casino stocks slid 20% in May, for the biggest monthly decline since September 2015. The worst performer was Wynn Macau Ltd., off 26%. For the year, the industry gauge is up 3.2%.
  MDT/Bloomberg