Macau Casino Revenue Up 9.3% To $4.05bn In May

The Chinese gambling hub of Macau has released its casino figures for May, revealing a 9.3% rise in revenues to 4.05 billion, compared to the $3.7 billion generated in the same month last year. Despite May’s total representing the third time this year Macau’s casinos reported revenues in excess of $4 billion, growth was below the  12% to 15% originally predicted by experts, leading Sterne Agee gaming analyst David Bain to comment:
“Final May results will likely be taken as negative given current investor skepticism, and focus, on Macau’s short-term results.”
Bain’s point was picked up by Union Gaming Group principal Grant Govertsen, who pointed out that while the resort’s mass market continued to grow at around 30%, Macau’s high-end customer base was currently experiencing only mediocre market growth. Whether this is in part caused by a recent anti-corruption campaign in China and the effect it may be having on junket operators is unclear. In addition, extra pressure was piled onto casino operators in May following an announcement by the Macau government that a full smoking ban will be implemented in mass gambling areas, and as Govertsen, explains:
“The (high-end) segment is likely tracking below expectations, with any deceleration in growth attributable to a confluence of factors.”
As a result of Macau’s mediocre monthly report, nervous investors punished Macau shares, with SJM Holdings down 3.2%, Galaxy Entertainment down 3.1%, and both Sands China and Wynn Macau falling by more than 1%. When Melco Crown Entertainment (-1.5%) and MGM China (-0.6%) are included, then the Hong Kong traded shares for all six companies are currently lower by 20% compared to their 52 week highs.
So far this year, however, casino revenues have generated US$20.8 billion in revenues, a 15.8% improvement over the same period in 2013, which eventually turned out to be record-breaking year for Macau. Consequently, gaming analysts are still predicting strong growth ahead for the rest of 2014, and as Ossolinski Holdings chairman Matthew Ossolinski, explains:
“While month-to-month it is difficult to predict specific outcomes, Macau’s continued, long term growth is well intact, underpinned by a perfect storm of strong economic fundamentals, strong political support, strong egos, and a culture disposed to gaming. The market remains vastly underpenetrated.”