Macau’s casino revenues continue to plummet with every passing month causing serious concern to casino’s and shareholders. Sterne Agee CRT reported that casinos had a tough month in June and mass revenue had dropped to 33.3 percent when compared to June 2014. These numbers confirm that revenue decline in June 2015 percentagewise is the biggest drop in the history of Macau’s casino industry.
VIP rolling chip volume also suffered and recorded a 52.5 percent drop, making it the lowest recorded percentage since March 2010. The report also stated that mass revenue had reached its lowest point since September 2012. Yet in the midst of all the doom and gloom that casino industry has experienced over the last 12 months, there appears to be a ray of hope on the horizon.
Sterne Agee CRT confirmed that while June 2015 gross gaming revenue (GGR) aggregate was at -36.2%, it was still a positive for Macau’s casino industry because June marked the 4th consecutive month where the result was ‘less bad’ when compared to the start of 2015. Sterne Agee CRT’s analyst David Bain who worked on the report stated that he expects ongoing improvements to occur in Macau’s casino industry and believes that this will continue till the end of the year.
Macau’s government recently relaxed the restrictions on its visa laws allowing more Mainland Chinese nationals to cross the border into Macau. This was the first time in a long time that Macau’s government had relaxed any norms to favour its struggling casino industry. Analysts believe that Macau’s government is finally making some amendments to help the casino industry recover. The share value for most of the major casinos in Macau experienced a spike when Macau’s government relaxed its visa laws as an increase in Chinese gamblers will automatically signify more business for Macau’s casinos.
The $2.6 billion expansion of Galaxy Macau’s casino has not yet resulted in a huge change in the market but David Bain believes that there have been encouraging signs for the casino industry and investors will be a lot more positive. In a statement, David Bain said “In June versus May, Galaxy mass market share rose to 19.3% from 16.5%, while VIP rose to 27.1% from 25.5%, results indicative of its new property expansion design dynamics (more geared toward mass than VIP) and table allocation from the Macau Government, in our view. With summer travel season now underway and transit visas being increased to 7 days from 5 days this month, there is some investor optimism for forward improvements from new supply.”
Sterne Agee CRT has estimated that Macau’s July GGR growth will be around minus 30 percent to 34 percent.
Correction: In an earlier version of this story we referred to equity analysts at “Stern Agee.” Sterne, Agee & Leach, Inc. (“Sterne Agee”) recently sold its equity sales, trading and research business to CRT Capital of Stamford, CT. Sterne, Agee & Leach, Inc. no longer produces equity security research reports. The proper reference should have been to “Sterne Agee CRT.”