GGR to decelerate late 2018, investors wary

The recent underperformance of 18Q2 has shifted investor sentiment of Macau stocks to that of a measured, potentially over cautious stance, according to Bernstein analysts.  

With second-quarter GGR below expectation and recent concerns of China’s economic slowdown to create headwinds in the medium term, Bernstein said they have trimmed estimates across the group.

Earlier this week, the DICJ released Q2 gross gaming revenue figures, which found VIP gaming rose 14 percent year-on-year, the slowest rate of growth in 18 months. The mass market also overtook the VIP sector for the first time since 17Q1.

“We are now entering a decelerating environment (especially as we move into Q4) with Mass poised to outperform VIP. However, we expect 2H to show deceleration in both Mass and VIP,” said Bernstein.

Looking into the second half of the year, Bernstein said it forecasts 18H2 GGR growth of 10 percent, with VIP to slow to 6 percent growth and mass at 12 percent growth.

It also forecasts industry-wide GGR growth of 14 percent in 2018, which will decelerate to 4 percent in 2019 “on more difficult comparisons and headwinds affecting the higher end of the market.”

“While the recent sector correction has potentially created buying opportunities in certain stocks for long-term investors who can stomach volatility, we are cautious in the near term,” said the brokerage.