Wells Fargo: April’s revenue growth up to 15 pct


Analysts at Wells Fargo Securities, LLC are expecting the city’s gaming revenues will grow by as much as 15 per cent year-on-year this month, according to the firm’s latest research note published yesterday.
‘We expect April growth to track at around 10 per cent to 15 per cent year-on-year,’ wrote the firm’s analysts led by Cameron McKnight.
‘Our estimate roughly implies daily revenues of MOP635 million (US$79.3 million) to [MOP]665 million, and is based on the average 7 per cent month-on-month decrease from March to April over the past five years,’ they explained.
In March, the local gaming industry raked in MOP21.2 billion in revenue, an 18.1 per cent year-on-year increase, and also representing eight months of consecutive year-on- year growth.
Wells Fargo’s estimate for this month’s revenue growth compares to consensus expectations of 12 per cent year-on-year, the firm notes.
‘In our view, VIP growth is rebounding back on the heels of last year’s economic stimulus – but we think this could stall once the effect of the stimulus and the Chinese housing bubble wears off – as it did in 2013/14,’ they wrote.
According to the firm, China’s continuous housing curbs and slowing of credit may impact the city’s gaming revenue this year.
‘We continue to think loose credit and housing have been driving the market recovery,’ the analysts said in the note. ‘We think continued curbs on housing speculation and slowing of credit will impact revenues later in the year.’
On the other hand, the firm perceives China’s plan to integrate the MSAR, Hong Kong and Guangdong – with the Guangdong – Hong Kong -Macao Bay Area project – will benefit Macau.
‘The integration would leverage the strength of each region (tourism/gaming, financial services, manufacturing) and compete with areas such as New York, Los Angeles, and Tokyo,’ the analysts suggest.
‘While challenging to quantify, this would be an obvious positive for Macau, but there is opposition to the plan and it would be years away from coming to fruition even in an optimistic scenario,’ they added.
The firm also stressed that the future Hong Kong-Zhuhai-Macau Bridge will potentially drive more visitations to the MSAR given that the city’s link with the Hong Kong International Airport would be shortened following the opening of the super bridge.