Macau GGR to slow during fourth quarter

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Analysts estimate that a slow VIP demand could decrease growth during the fourth quarter of the year.

Macau.- Analysts from brokerage Bernstein estimates that gaming gross revenue growth in Macau could decelerate during the fourth quarter of the year due to a slow VIP demand. Macau has been experiencing a strong recovery period from two years of decline that also coincided with China’s crackdown on corruption.

As Barron’s said, resurgence in spending by VIP gamblers and a rise in mass market tourism in Macau helped gross gaming revenue to grow 22 percent year-on-year during the second quarter of the year eded June 30. Despite a positive lookout in the long run and expectations of mass market segment to drive growth, the brokerage said that share price for most of the six Macau casino stocks under its coverage won’t likely see a significant appreciation.

GGR growth is expected to decelerate to 20 percent during the third quarter period and 8 percent during the last quarter because of a slowing VIP demand. For the overall 2017 results, Bernstein expects GGR to grow over 15 percent.

Vitaly Umansky, analyst from Bernstein, said: “Wynn Macau continues to gain traction with the ramp up of Wynn Palace and defending its strength at Wynn Macau (Peninsula). Whilst Wynn has benefited from the recent VIP recovery, it also continues to be a share taker in VIP on the strength of its product and service offerings. In Mass, Wynn Palace is strongly positioned in the market over the longer run and should continue to ramp up over the next few quarters as marketing efforts are enhanced and the connectivity to the property improves.”

Last week, Morningstar Inc., an investment research firm, released a note stating that casino gross gaming revenue in Macau could expand by just 10 percent year-on-year in 2017. According to analyst Chelsey Tam, “GGR comparisons will become progressively tougher over the next few months (as last year’s Sands and Wynn casino openings are lapped), and a slower economy in the second half and capital-control policy risks could create near-term headwinds.”