Macau May revenue surges past expectations

Gross gambling revenue for May in Macau jumped 23.7 percent, far exceeding analysts’ expectations, most likely due to continued strength in the VIP market.

Total revenue was MOP22.7 billion ($2.8 billion), according to figures from the DICJ. That far exceeded the consensus expectation for growth of 16 percent in the month.

The strong gain came despite a visit to the territory by China’s No. 3 politician, the Chairman of the National People’s Congress, Zhang Dejiang, which had been expected to curtail growth.

“We are very encouraged by the May results, which we had expected to be suppressed by the Zhang visit, as well as the slightly unfavorable calendar,” Union Gaming wrote in a note. “That Macau exceeded consensus again and turned in a GGR story just shy of February (Chinese New Year), suggests the recovery is in full-tilt.”

Union Gaming estimates that mass market revenue likely gained at a rate in the high teens, while VIP growth is also accelerating. However, year-on-year comparisons are favorable as the VIP market was approaching its lowest point this time last year.

“High hold rates in VIP along with continued volume strength creates volatility and lack of ability to more accurately forecast the monthly trend,” Bernstein Research wrote. “However, based on our channel checks during the month, we believe that Wynn and Galaxy showed m/m improvement in market share, with SJM and Sands showing some m/m deterioration and MGM and MLCO generally unchanged m/m.”

For June, Bernstein expects GGR to gain about 20 percent to 26 percent. Union Gaming said it also expects June GGR to be “well north” of 20 percent. For Q3, it expects growth of 15 percent, with a full year gain of 14 percent.

Union Gaming also notes that President Xi Jinping is expected to visit Hong Kong at the beginning of July, which may have a cooling effect on Macau’s VIP revenue.