Overall gaming revenues positive over next two years: analysts

Morningstar Investment Management Asia Ltd is forecasting Macau’s total market gaming revenues will reach a 14 percent year-on-year increase in 2018.

VIP market revenues will continue to decrease however.

According to a note from the investment manager, the next two years will see a widening decrease of VIP market revenue, decreasing 3 percent in 2017 and 6 percent in 2018, while mass growth will remain in single digits, up three 3 percent in 2017 and 5 percent in 2018.

“Overall gaming revenues in the next two years will become positive, with an expected seven per cent and 14 per cent year-on-year increase in 2017 and 2018, respectively,” said the investment manager.

The forecast differs slightly from that of the Global Gaming Handbook released by Fitch Ratings earlier this week, projecting approximately a 5 percent decline in Macau’s 2016 gaming revenues, and mid-single digit growth in 2017 and beyond, which “assumes high single digit mass market growth and relatively flat VIP growth.”

The gaming report released by Morning star predicts Macau’s gaming sector to finish 2016 with a one percent year-on-year decrease in total gaming revenues.

Morningstar also says that gaming tables utilization will increase only after key infrastructure in the city is finalized, which will result in more visitors.

“We expect casinos to install more live multi games – having a gaming table connected to a number of betting terminals – and two-sided gaming tables with two dealers for lower tier gamblers, and to allocate tables to premium mass segments,” said the group’s equity analyst Chelsey Tam.

Fitch makes a similar prediction in their report. “Despite being delayed, the pending infrastructure projects, such as the bridge to Hong Kong, a permanent Taipa ferry terminal, a rail link to Zhuhai airport and the intra-city light rail should make Macau more accessible. We expect the returns on investment to improve over time as the market pivots toward the mass market segment and the infrastructure projects come online.”