February GGR up 4.4 percent due to resilient mass

Following a slightly weaker than expected Chinese New Year week, Macau gross gaming revenue grew 4.4 percent year-on-year in the month of February, performing in-line with analyst expectations.

February revenue was MOP25.4 billion (US$3.1 billion), up from January’s MOP24.9 billion, a month which marked the first shrinking of Macau gaming revenue in more than two years.

Based on their on-the-ground observations and robust foot traffic trends in the month, analysts from Union Gaming said February growth appeared to be boosted by mass market performance.

The results, however, were hampered by VIP, which dipped into the negative territory on a market-wide basis.

“While all eyes are on Macau’s holiday periods, especially CNY and October’s Golden Week, the reality is that the wealthy Chinese consumer… is already spreading out holiday patterns rather than concentrating time off,” said Union Gaming in its Friday note.

“This has always been the dynamic that drove VIP players to often sit out the actual CNY period but then come to Macau the next week. We’re now seeing more and more premium mass caliber customers exhibiting this behavior and choosing to defer trips to a less hectic time.”

Union Gaming analysts said they expect the traditional peak holiday period to become less “peaky” going forward.

Observations from analysts at Bernstein appear to have supported this theory, with analysts noting a pick up in GGR in the week following CNY as high rollers returned to Macau.

Analysts expect March and April comps to remain tough, with GGR forecasted to between -2 and 2 percent year-on-year.

“A slowing economic environment in China poses headwinds to GGR growth in Macau in 2019… The recent credit growth was seen in China (January) is positive to Macau, but may not create a tailwind to high-end play for several months as the impact has generally lagged GGR by 1-2 quarters,” said Bernstein.

Union Gaming said easing comps in the second quarter will see GGR growing creeping up into the mid-single digits, to remain there for the rest of 19H2.

“For the whole year, we are still forecasting growth in the mid-single digits (aka a GDP-like story), with mass market outperforming VIP by many hundred basis points,” it added.