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As the year kicked off, there was a lot of optimism and anticipation that the New Year would be good in terms of gaming revenue for Macau. Unfortunately, as things stand, the city started the year on the wrong note.

There have been widespread reports that there’s a severe health concern, and it’s been corroborated by health officials in the city. There have been various reports of pneumonia that have emanated from Mainland China but there have also been reports of such cases in Macau too.

This news is coming at the worst time as Macau was just recovering from a slow fiscal year, where they were not able to meet their financial expectations. Nomura analysts are not enthusiastic about the GGR (gross gaming revenue) for this month – this will now be worsened by the health scare in the city.

Calvin Ayre was able to get their hands on a report which was disclosed by Harry Curtis, Brian Dobson, and Daniel Adam – analysts from Nomura. According to them, they stated that Macau’s GGR for January will most likely be flat. The gross gaming revenue increased by 11 percent when compared to the average gotten each day for the month of December.

This analysis was derived from the results released for the first 5 days of this month. There was a difference of 4 percent when compared to the company’s performance this time last year. Within 5 days, the company earned a GGR of $102.4 million, which is higher than the $91.97 million earned in December.

So far, various gaming segments have posted different performance levels this year. According to the analysts, they said:

“By segment, we estimate that average daily mass revenues are up approximately 5 percent to 7 percent year-on-year adding that VIP volumes are approximately 15 percent to 20 percent lower compared to a year ago.”

Historically, they went on to say that the daily overall Gross Gaming Revenue for January and February usually post gains between 4 and 5 percent to December. From the look of things, the analysts are still bullish about the city’s performance in January as they only expect a flat GGR performance.

The same cannot be said for the month of February. The stated that the year on year performance of February is usually poor. Using last February’s performance, they explained that the Chinese New Year was changed from February to January and it would definitely affect their performance.

The analysts from Nomura are not the only ones expressing concern about the current and future performance of Macau as regards gambling. Kelsey Zhu, Eunice Lee, and Vitaly Umansky are analysts from Sanford C. Bernstein brokerage. They pointed out that the cumulative GGR for casinos in the city for the first 5 days of the year is in the region of $511.68 million.

While the daily average was estimated to be $102.33 million. The reason for this was a “high hold” by several casinos and an increase in activities around the region – this was caused by Xi Jinping, the President of China, who paid a visit to the city.

They also added that the collective performance for the first 2 months of 2019 will be in the region of -1-2 percent when compared to the same time last year.

In conclusion, the analysts said:

“One key driver of the January result will be how the visa constraints that were in place in November and December are being loosened. If we see continued tight visa controls in place, the GGR impact will be more negative than we currently forecast.”

 

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