March gaming revenue drops more than expected to MOP18b

Macau’s casino revenue fell more than analysts’ estimates last month as mainland Chinese gamblers dissipated after February’s week-long Lunar New Year holiday.
Gross gaming revenue decreased 16.3 percent to 18 billion patacas (USD2.3 billion), according to data from Macau’s Gaming Inspection and Coordination Bureau, marking 22 consecutive months of declines. That compares with the median estimate of a 15.5 percent drop from six analysts surveyed by Bloomberg and a fall of 0.1 percent in February.
Macau casinos have been in a downturn since mid-2014 as China’s anti-corruption campaign and a slowing economy kept the country’s high rollers away from the world’s largest gambling hub. Operators such as Galaxy Entertainment Group Ltd. and Melco Crown Entertainment Ltd. have opened new resorts since last year to woo more holidaymakers.
About $46 billion of market value was wiped out last year from the city’s six gambling houses, but most of their shares have rebounded so far this year. While Bloomberg Intelligence’s index of Macau gaming stocks rose 16 percent in the first quarter, such increase could be short-lived, said Richard Huang, an analyst at Nomura Holdings Inc.
“The recent share rally is based on its low valuation, it isn’t driven by business performance,” Huang said in an interview before the March gaming data were released.
Shares in the index fell 3.5 percent as of 1.30 p.m. with Sands China Ltd. and MGM China Holdings Ltd. down the most, about 4 percent.
Still, there’s a risk that the rally may be short lived as Macau’s shares have seen several short-term rebound whenever gaming revenue showed some signs of recovery and when there were news of potential supporting policies from the government, said Deutsche Bank AG analyst Karen Tang in a report. The market will probably recover in the second half of 2017, she wrote in a March 30 note.
Investors expect casino companies’ first-quarter profit to improve because the Lunar New Year results came in better than expected, but revenue during the period is no better than the previous quarter, according to a Nomura note. Gambling receipts will probably remain soft in the second quarter because of a lack of major holidays to boost customer traffic.
Investors could also begin questioning whether the openings of Wynn Macau Ltd. and Sands China Ltd.’s billion-dollar resorts later this year would help earnings because of the “disappointing” visitation and revenue generated by the new casinos last year, according to the Nomura report published Monday.
Gaming revenue in the first quarter dropped 13.3 percent to 56 billion patacas. Daniela Wei, Bloomberg