Macau average daily revenue sees slowdown; analysts

Macau gross gaming revenue in the first 17 days of Jan. was MOP 11.1 billion (US$1.4 billion), implying average daily revenue (ADR) of MOP 564 million per day, down from the week before, according to separate reports from HSBC and Bernstein.

The full month is expected to finish at between MOP 19 – 20 billion, implying an ADR of around MOP 560 – 630 million per day for the remainder of the month, tracking for a 16 – 20 percent year-on-year decline for Jan. 2016, according to the HSBC report.

HSBC analysts attribute the week-on-week slowdown to softer VIP volume and a lower win rate.

Bernstein reports somewhat similar estimates, which assume an ADR of MOP 540-580 for the remainder of the month, which would put Jan. GGR at MOP 18.5-19.4 billion, a year-on-year decline of 18-22 percent.

The assumption factors in a slowdown in the remainder of January leading into the Chinese New Year holiday (starting February 7).

In regards to stocks, Deutsche Bank named Sands China Ltd. as its top pick for the Macau gaming sector due to its interim dividend yield of 8.8 percent.

The research house said Macau gaming stocks will show short-term improvement in February due to Chinese new year, but investors should be cautious given the number of false starts in the last two years.

This week, DICJ released figures showing VIP gaming revenue declined 39.9 percent year on year to MOP 127.8 billion (US$15.9 billion) from MOP 212.54 billion. On the other hand, mass market revenue which includes slot machines, declined 25.9 percent year on year in 2015 to MOP 103.0 billion from MOP 139.0 billion.