June mass revenue down 33.3 percent, lowest since 2012

Sterne Agee said that June mass revenue was down 33.3 percent, its worst year-on-year decline in history, while VIP rolling chip volume was down 52.5 percent, a decline eclipsed by both March and February of this year.

On an absolute basis, mass revenue was its lowest since September 2012 and VIP win was its lowest level since March 2010.

“On the bright side, the aggregate June GGR growth of -36.2% marks the fourth sequential “less bad” result and we expect sequential improvements to continue through the remainder of the year,” said analyst David Bain.

Bain says Galaxy Macau’s $2.6 billion expansion is off to a slow start, not boosting results beyond Macau’s month-over-month GGR averages. Notably, June GGR month-on-month growth result was down 14.7 percent versus the historical average of negative 11.6 percent.

“In June versus May, Galaxy mass market share rose to 19.3% from 16.5%, while VIP rose to 27.1% from 25.5%, results indicative of its new property expansion design dynamics (more geared toward mass than VIP) and table allocation from the Macau Government, in our view. With summer travel season now underway and transit visas being increased to 7 days from 5 days this month, there is some investor optimism for forward improvements from new supply.”

Sterne Agee’s July GGR growth estimate is negative 30 percent to negative 34 percent, keeping with the trend of sequentially “less bad” growth.

In response to the changes to transit visa loosening, SA cited a former member of the Macau Assembly as saying that the change from Beijing was premeditated to balance negative momentum in Macau.

“[These are] imbalances that could be seen as a trigger leading to demonstrations/less harmony – similar to events in Hong Kong. However, he also noted the reaction from some heavily politically connected Assembly members leaves some doubt to his thesis (some Assembly members well connected with Beijing were scratching their heads on the change, he noted).”