Beyond comparison


The city’s casinos posted their second-best result last month, influenced by the Chinese New Year holiday In what was the second-best take ever for Macau’s casinos, gross gaming revenue shot up 34.8 percent year-on-year last month to MOP25.04 billion (US$3.1 billion), the most recent government figures show. The record, set last October, is MOP26.85 billion. Although towards the high end of some estimates, the sum came in behind some analyst predictions, which suggested a new all-time record. The results were strongly affected by holidaymakers over the Chinese New Year break and analysts say they will only have a handle on the year ahead after February’s numbers are released. The festival was earlier this year – typically it falls in February – making year-on-year comparisons much harder. In its note to investors, Union Gaming Research Macau said January “was an ‘easy’ calendar comparison” as January 2011 did not include Chinese New Year. “As compared to February 2011, which did have Chinese New Year, January grew 26 percent, although after adjusting for three fewer days in February, we estimate year-on-year growth was closer to 15 percent.” Union Gaming’s analysts say January’s return was not as strong as they had predicted due “to lower VIP volumes” and because “several operators also played a bit unlucky (but not dramatically)”. “Given the shift of Chinese New Year into January, we believe February will pose a difficult comparison for the market, despite the extra day,” Deutsche Bank gaming analyst Carlo Santarelli told investors. “As such, we believe looking at the aggregate of January and February for comparison purposes is more appropriate.” For that two-month period, Union Gaming is expecting a 20 percent year-on-year growth. Reading tealeaves Until then investors and analysts will stay cautious, pricing in a slowdown in growth from 42.2 percent for the whole of last year to 15 to 20 percent this year. Union Gaming Research is forecasting 30 percent gross gaming revenue growth for casinos in the first half of the year. “We continue to believe the VIP segment should remain strong through at least the early part of 2012, as our channel checks suggest VIP demand is growing, not shrinking (despite macro-China fears) with junkets asking for additional tables at many/most properties,” it says. Union Gaming expects Sands Cotai Central to be a driver of demand, much as other new properties have done previously, the most recent case being Galaxy Macau. The company is still forecasting 20 percent gross gaming revenue growth for Macau this year for a take of MOP321 billion. Morgan Stanley says Macau can expect 15 percent gaming growth this year. The investment bank says that the mass market will grow by 24 percent, double that of the VIP segment. HSBC Global Research’s analyst Sean Monaghan is sticking to his full-year forecast of 16 percent. Meanwhile, last month brought some changes in the market share of the Macau-based casino operators. SJM Holdings Ltd. leads the market with a 27-percent market share but is now followed by Sands China Ltd. with a share close to 19 percent. Galaxy Entertainment Group Ltd. fell to third position by only a fraction of a percentage point. Melco Crown Entertainment Ltd. held onto fourth in the league table with a 13-percent share, closely followed by Wynn Macau Ltd., with a share approaching 13 percent. MGM China Holdings Ltd. has a 10-percent share.