MACAU BUSINESS
These results, he posited, will not provide many
answers with regard to what happened in February. Although he believes that as March progresses there will be greater insight into the composition of February’s gross gaming revenue - mass market versus VIP - and whether or not February results really do represent a ‘new normal’ or if March/April will return to a gross gaming revenue story that’s more like November-January (MOP23-24 billion). He adds that the research house is not overly convinced about the first hypothesis.
Within expectations
Macau’s Chief Executive, Fernando Chui Sai On, said that such a drop was expected, claiming he will adjust the monthly target for gaming revenues to MOP20 billion in the coming Policy Address, based on the latest gross gaming revenue that the city posted last month. He indicated that the plunging gaming revenues will not affect the current expenditure of the government. Secretary for Economy and Finance, Lionel Leong
Vai Tac, claimed that the recent record-breaking drop in gaming revenues was within expectations. He said that it is not realistic to think that revenues will soar back in April.
In addition, Mr Leong claimed that it is
understandable that the city’s gross gaming revenues posted such a mammoth drop in gaming revenues as February 2013’s amounted to MOP30.8 billion, a record high.
He added that the MOP43.3 billion that the city
generated from the gaming industry during the first two months of the year was the median of the revenues in the same period of 2012 and 2011, despite representing a decrease of 35.1 per cent compared to the first two months of 2013. In 2012, the city received MOP49.2 billion in the
two months while some MOP38.4 billion was posted in January and February 2011.
“Although the fiscal surplus of dozens of billions
may not be posted this year, [it] will still meet the budgeted amount. It is only that we had a great
24 APRIL 2015
amount of money left [over] in the past, and this year we won’t have as much as we had,” the Chinese- language newspaper Ou Mun quoted Mr. Leong as saying.
Good news According to Mr. Govertsen, the good news is that
based on the full-month gross gaming revenue story, daily casino takings picked up significantly in the final days of February, which also represented part of the traditional ‘boom’ period shadowing Chinese New Year. “We estimate that daily gross gaming revenue was
approximately MOP1.1 billion, or more than two times the daily run-rate leading up to Chinese New Year. To us, this suggests that typical seasonality patterns are still in play, though less dramatic relative to prior years. We were also encouraged by the headcounts on casino floors over the period,” he wrote.
The analyst believes that mass gross gaming
revenue held up fairly well over the holiday period, with revenues likely declining only in the mid/high single digits.
In addition, he notes that February’s revenue story
was only 8 per cent below the most recent ‘baseline’ of MOP23-24 billion after adjusting for 28 days in February versus 31 days in each of December and January.
Gaming revenues have now been declining for nine consecutive months since June 2014. February’s decline of 48.6 per cent remains within the range expected by most analysts, who were predicting a decline of anywhere between 45 and 55 per cent. The drop in gaming revenues is primarily driven by the VIP segment, he says: “The last time we saw a gross gaming revenue number of this magnitude was in early 2011. There were numerous contributing factors, although we believe the biggest culprit for the weak month was the already-troubled VIP segment.” The crackdown on corruption initiated by
President Xi Jinping and visa restrictions on Mainland visitors wanting to come to Macau have
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