Macau December GGR better than expected, 2016 seen tough for VIPs

Macau’s gross gambling revenue fell 21.2 percent in December, which was slightly better than the consensus forecast for a decline of about 23 percent to 24 percent.

According to figures from the Gambling Inspection and Coordination Bureau, December revenue was MOP 18.34 billion ($2.3 billion). For 2015 as a whole, GGR tumbled 34.3 percent to MOP 230.84 billion, a five-year low and weaker than most forecasts.

According to Union Gaming, the final two weeks of December were marginally better than operators had been expecting, with improvements across the board in mass, slots and VIP.

The firm says the mass market may now have stabilized, though the VIP market is likely to see no reprieve in 2016, with a further decline expected of around 12 percent.

Pressure is likely to continue as China’s anti-corruption drive grinds on and Macau tightens supervision of junkets and capital movements.

“That being said, the mass market story continues to feel significantly better than VIP with signs of stabilization already upon us. Recall that 3Q15 mass / slots GGR was flat relative to 2Q15 and we think will be up slightly on a sequential basis in 4Q15,” the firm said in a note.

Meanwhile, Wells Fargo analysts reported that Macau visitation declined 7.6 percent in November 2015, with mainland visitors down 12.6 percent. On a sequential basis, Macau visitor arrivals fell 1.8 percent month-on-month versus +5.6 percent for the same period in November the prior year. Same day visitation was down -14 percent year-on-year, while overnight visitation rose marginally +0.4 percent year-on-year.

Deutsche Bank analysts calculate average win per day during the period July 2015 to October 2015 at $74.3 million. For Y15Q1 it was $90.0 million, with Q2 coming in at $78.2 million, Q315 coming in at $74.0 million, and Q415 coming in at $74.6 million. Using the $74.3 million daily average for Y16, DB analysts say this would imply a 2016 GGR of $27.2 billion, down 5.9 percent year on year.