GGR for 2015 expected to decline 27 percent: UBS

UBS has revised its Macau gaming revenue growth expectations for the next three years with GGR in 2015 expected to come in at negative 27 percent, a downward prediction from negative 21 percent, driven primarily by softer than expected 15Q1 trends and slower 15Q2 run rate. 

Analyst Robin Farley said 2016 and 2017 revenues are expected to grow 7 percent and 12 percent, respectively, from 8 percent and 11 percent as initially predicted.

GGR for 15Q1 fell 37 percent YoY compared to UBS estimates of a 26 percent decline.

“Q2 is so far tracking down -37-39% (April came in at down -39% and May down -37%), not showing much of YOY improvement, other than slightly seasonal pickup in sequential trends in May. We are revising our Q2 revenue estimate down -9% sequentially from flattish previously, and expect some sequential recovery in revenue from Q3’15 on.” 

UBS is also revising VIP segment revenues for 2015, 2016, and 2017 to negative 37 percent, zero percent, and positive 3 percent, down from negative 31 percent, unchanged at zero percent, and positive 6 percent, respectively; Mass segment is tipped to be negative 12 percent, positive 14 percent and positive 19 percent from negative 8 percent, positive 17 percent, and positive 17 percent, respectively. 

“While grind mass could see some sequential uptick from Galaxy opening and further ramp up in H2, as well as from MPEL’s Studio City coming into the market, we believe the junket system remains relatively unhealthy in Macau. We could see some potentially positive tailwinds from H2 macro environment in China, perhaps driven by policy easing.”