19Q1 GGR falls slightly, led by VIP baccarat decline

VIP Baccarat revenue fell nearly 13.4 percent year-on-year in the first quarter of 2019, reaching MOP37.2 billion, according to data from the Gaming Inspection and Coordination Bureau.

The fall in VIP revenue was the main contributor to the slight fall in Q1 GGR, which fell 0.5 percent year-on-year to MOP76.2 billion in the quarter.

Mass GGR growth, however, held up well, growing 16.1 percent year-on-year to MOP38.9 billion. Mass baccarat increased 19.5 percent year-on-year in the quarter.

On Wednesday, analysts from Bernstein said that GGR growth deceleration in the quarter wasn’t as bad as initially anticipated.

It noted that GGR growth was impacted by three key drivers: 1) continued weak China macro sentiment at the beginning of the year and slow credit growth in 18H2, 2) tough y/y comparisons 3) GGR in Q1 impacted to some extent by enforcement of the smoking ban, which began on January 1, 2019.

Bernstein said it expects the year-on-year comparison to remain tough until the end of April and May, and begin to ease in May/June.

“One area of potential high-end GGR stabilization and renewed strength may come from a recovering credit cycle in China which may support VIP recovery in 2H,” said the analysts.

For individual operators, Bernstein said it expects MGM China to show the highest year-on-year GGR growth from the opening and continued ramp-up of MGM Cotai (opened in February 2018), followed by Sands China, due to an overall shift in business mix to mass.

Melco and SJM both face difficult y/y comparison. Galaxy and Wynn Macau both suffered from the declines in VIP volumes.

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