Macau showings signs of recovery: J.P. Morgan

Macau’s gross gaming revenues are showing genuine signs of recovery and point to a positive gaming market in the years ahead, noted J.P. Morgan in a recent report.

“Recent 2016 third quarter results demonstrated that the sector’s earnings power is much stronger than what the market had projected, driven by a benign cost environment despite new openings, as well as benefits from stronger mix and operating leverage,” said J.P. Morgan analyst Sean Zhuang in the report, titled ‘Macau Gaming – Time to Invest in Industry Upturn for Years Ahead.”

The report also predicts 2017 and 2018 will see gross gaming revenue growth of 9 percent and 6 percent, respectively, and that industry EBITDA will grow 31 percent over the next two years.

The report also notes the number of visitors, as well as their length of stay, has continued to grow since the end of 2015.

On Tuesday, Macau’s chief executive Fernando Chui Sai said he was optimistic, but cautious about Macau’s gross gaming revenue for the year ahead.

“For the next fiscal year, similar to this fiscal year, we predict that total gaming revenue will amount to MOP200 billion (US$25 billion),” the chief executive was reported as saying, following his 2017 Policy Address to local legislators.

“In the past 25 and 26 months, Macau’s economy has undergone a deep adjustment phase due to the [decrease] in the gaming revenue – from MOP30 billion, to MOP20 billion and to MOP18.8 billion. That’s why we make a projection of MOP200 billion, with average monthly revenue amounting to MOP16.6 billion. We are cautious but we are optimistic,” he explained.

Chui added that he was confident the economy will post positive growth in the year ahead.