September saw casinos in Macau post a better-than-expected 7.4% increase year-on-year in combined monthly gross gaming revenues due in part to the VIP segment likely reporting its first rise in takings in some 29 months.
According to a report from GGRAsia citing official figures from the Gaming Inspection And Coordination Bureau, combined mass-market and VIP gross gaming revenues for September hit $2.30 billion while the official third-quarter split between the two verticals is due to be published later this month.
“We view the surprise as coming from the VIP segment, which we estimate to have risen circa 5% year-on-year versus year-on-year declines of circa 10% in July and August,” read a note from JP Morgan Securities (Asia Pacific) Limited analysts DS Kim and Daisy Lu published by GGRAsia. “[This makes September VIP] the first positive growth in 29 months. The key question will be whether or how long this VIP momentum is sustainable.”
Kim and Lu reported that August gross gaming revenues had improved by 1.1% year-on-year, which represented the first such growth in 27 months, and had probably been supported by the opening of the $4.2 billion Wynn Palace Macau from Wynn Resorts Limited on August 22. Likewise, the pair declared that they expect September’s figures to have been positively affected by the launch on September 13 of Sands China Limited’s nearby $2.5 billion Parisian Macao Casino Resort.
A report from Sanford C Bernstein Limited analysts Vitaly Umansky, Zhen Gong and Yang Xie explained that September gross gaming revenues had benefited from “higher than normal VIP hold rates and stronger than expected VIP volumes” while the mass-market segment was “likely up in low to mid double digits [of the] 11% to 14% range”.
“The Gaming Inspection And Coordination Bureau will release [a] third-quarter breakdown of gross gaming revenues in mid-October,” read the analysis from Umansky, Gong and Xie. “While this data is flawed due to lack of reclassification of certain VIP play to premium mass, it will give better sense of the gross gaming revenue split in the third quarter.”
Adding to the good news, a report from Union Gaming Securities Asia Limited released on Saturday declared that Macau daily casino gross gaming revenues for September hit $76.74 million, which represented “the highest non-holiday gross gaming revenues per day for about one-and-a-half years”.
“While room rate surveys have shown that rates across all of Macau and Cotai are down year-on-year and remain at bargain levels, we believe this is okay and don’t view this as a leading indicator of “soft” gaming trends,” read the research from Union Gaming Securities Asia Limited analyst Grant Govertsen. “We think the discounted room story is actually driving incremental customers to the market; another advantage for Sands China Limited given its dominant amount of room inventory.”
A subsequent note from Deutsche Bank Securities Incorporated analysts Carlo Santarelli and Danny Valoy predicted that gross gaming revenues for October might expand by as much as 8.5% year-on-year due to the month-on-month improvement in casino “win”.
“While the [September] results are stronger than expected from a sequential and supply-adjusted framework, we believe the honeymoon periods of both the Wynn Palace Macau and the Parisian Macao Casino Resort played a role and, hence, we believe the fourth-quarter results will be more telling,” read the note from Santarelli and Valoy.