MACAU BUSINESS
played a major role in declining gaming revenues. He says that it is possible that VIP players “made a conscious decision to stay away from Macau given the potential for increased scrutiny by the People’s Republic of China during the holiday period”. At the same time “it is also possible that an incremental segment of VIP customers has decided to lay low in advance of the two big annual legislative sessions – the Chinese People’s Political Consultative Conference (CPPCC) begins on March 3 and the National People’s Congress begins on March 5 – where corruption will be a major talking point.” Govertsen also recalls that the highest-level official
to date to fall foul of Xi Jinping’s dragnet, Ling Jihua, has just been expelled from the CPPCC. This, too, could be weighing on VIP sentiment, he adds.
Still positive
According to data released yesterday by the Gaming Inspection and Co-ordination Bureau, during the first two months of 2015 gaming revenues accounted for MOP43.3 billion, representing a decrease of 35.1 per cent in comparison to the same period in the previous year when revenues were MOP66.7 billion. Even so, Union Gaming’s outlook for the second half of 2015 remains positive: the house believes that the industry will recover. “We remain committed to our positive outlook on
the group, despite the challenging Chinese New Year, although we expect continued volatility over the coming months”, he says. He adds that March and April will be important guideposts to whether or not the trends seen in February were influenced by various one-time factors
or were signs of a new baseline. “Regardless, we continue to have a much higher degree of confidence in mass market trends, which, at least over the Chinese New Year holiday period, seemed to hold up well against a very difficult comp.” David Bain of Sterne Agee forecasts that March
gross gaming revenue growth will deliver between -36 per cent and -41 per cent. He says that March growth should be “less bad” than February, and April less bad than March. “March gross gaming revenue is the second most challenging year-on-year comparison for 2015. Last year, March gross gaming revenue was +13.1 per cent, mass gaming was +40.1 per cent, and VIP was +3.1 percent,” he says. He adds that investors have been expecting the Macau market and company specific consensus to be lowered following the first few weeks of February’s channel-checked results. Sterne Agee continues to anticipate positive growth in the third quarter of 2015 followed by significant growth in the fourth quarter. Mr. Bain believes that in the first quarter of this year the Macau company specific consensus will drop 5 per cent to 10 per cent.
26 APRIL 2015
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