Macau Casino Revenues Beat Forecasts in March

Macau’s casino market has started to gain pace since breaking a 26 month losing streak in August of 2016, with every subsequent month having been a winning one. That trend has now continued into March, and furthermore, the latest financials from China’s only legal gambling resort is the best to date post-revival, with revenues soaring by 18.1% to $2.65 billion.
The hugely positive result follows a moderate 3.1% year-on-year gain in January, and a 17.8% improvement in February, with March’s figure also beating the 15% forecast provided by Bloomberg analysts. In additional good news, both the recreational and the high-roller segments returned positive gains during the non-holiday period, with JPMorgan estimating a 27% VIP revenue increase in March compared to a 10% improvement for the mass market. Amongst the reasons cited for the upward trend is a pivot towards more recreational based entertainment in order to increase mass market appeal, as well as a greater level of cooperation between junkets and the government, with liquidity availability having been boosted as a result. Commenting on the development, JP Morgan Securities analysts DS Kim and Sean Zhuang stated:
“Average daily revenue came in at MOP685 million [US$85.6 million] per day, the strongest non-holiday print in two years, and almost comparable to the recent October level.”
As a result, Macau casino revenues are 13% higher in the first quarter of 2017 compared to Q1 of 2016, with several brokerage firms subsequently revising upwards their full-year market forecasts. This includes Deutsche Bank Securities Inc, which has raised its estimate two points to 12% for the year. Considering the double-digit improvement, the firm’s prediction may seem conservative, but explaining its caution, analysts Carlo Santarelli and Danny Valoy stated:
“The second quarter has been softer than the first quarter over the last three years from an absolute dollar GGR perspective, [but] we expect the negative delta to narrow in 2017 and are projecting just a 4 percent sequential slowdown [in Q2].”