MACAU BUSINESS
Gaming revenue grew 25.4 percent year-on-year in
March, breaching the MOP30-billion threshold at MOP31.3 billion, with strong increases in both the VIP and mass-market segments. According to research from Wells Fargo Securities,
March mass-market table revenue grew 30 percent year-on-year. VIP revenue grew by 24.9 percent, reaching MOP21.8 billion, 69.7 percent of total revenue. The March VIP growth rate was almost 20 percentage points higher than the previous month. Many observers cited two major factors that keyed the VIP recovery in March. China’s leadership transition was completed, easing concerns that new President Xi Jinping’s regime would target Macau VIPs in its promised anti-corruption crackdown. Secondly, Lunar New Year was celebrated in February. While visitor arrivals spike during the holiday period, gaming revenue tends to peak in months before or after it. Wells Fargo analysts led by Cameron McKnight add that March results were positively impacted by VIP hold. With normal hold, gaming revenue would have reached MOP29.1 billion. That would still have been a new record, but short of MOP30 billion. United States-based brokerage firm Sterne Agee
says this was just the beginning. “We believe March marks the first of potentially six all-time monthly gross gaming revenue records we should see in 2013,” analyst David Bain told investors. Official figures for the full first quarter show VIP
revenue grew 9.8 percent, and comprised 67.8 percent of total gaming revenue, which grew 14.8 percent, to MOP85.3 billion.
Next hurdle
The March numbers underscore two key points about the road to MOP40 billion, given the dizzying levels already reached. First, along with a healthy
26 JUNE 2013
economic and political environment, not just in the mainland but regionally and globally, there needs to be some kind of catalyst, a positive factor different from previous months. Second, VIP revenue is still the main growth driver. “Even though mass market revenue has been
growing rapidly at an average of 30 percent, which is a more linear trend, in order to reach MOP40 billion, VIP has to be the driver,” says Hoffman Ma Ho Man, who follows both market segments as deputy chairman of gaming operator Success Universal Group Ltd and deputy chief executive of casino resort Ponte 16. Mr Ma warns that “growth may be choppy” due to
the volatility of the VIP market. Nevertheless, he says that reaching MOP40 billion will necessarily mean growth in every segment. “Mass market will obviously be generated by substantially more footprint, whereas the VIP market can be generated by bigger bets per customer. So reaching MOP40 billion, you can expect, will pack every hotel, casino, Macau Peninsula, Cotai, and non-gaming attractions,” he says. “VIP can move the market forcefully, but
incremental contributions from mass and slots are also important,” Newpage Consulting principal David Green says. “Slots are just 4 percent of revenue in Macau but that’s still US$2 billion [per year], and that’s a substantial amount for any business. But the real horsepower is still from VIP.”
Supply-side economics Mr Green says recent consolidation in the junket
business has created firms that are better able to “smooth out some of the variability” in the VIP market, as well as withstand challenges from competing jurisdictions. That will help sustain progress in gaming revenue growth toward MOP40 billion, he says.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66