What was that about a crackdown on junkets?
Macau’s six casino operating companies are enjoying a gangbusters of a revenue month, with slots and tables up more than 29% year on year as of yesterday.
That’s according to checks by RBC Capital Management, which has joined its voice to a chorus of investment houses that are confident March will surpass December 2012’s performance to set a new monthly gaming revenue record.
The reason: a resurgent VIP sector, which is growing at 15-20%—“the strongest rate we have seen since 1Q12,” says J.P. Morgan’s Kenneth Fong—adding its heft to a mass market that continues to hum along at +30% YoY.
“Despite the anti-corruption talk and tighter regulation on gifting in China, Macau VIP revenue continues to hold up, signaling strong true underlying demand,” he said.
In an 18th March notes to investors, RBC’s John Kempf had GGR, excluding electronic table games, at +34% YoY. Mr Fong more recently (24th March) had total GGR at MOP25.3 billion (US$3.16 billion) and tracking at +26% YoY. He expects the month will end at around MOP31.6 billion (US$3.95 billion), up 26% over March 2012.
It’s a pace that could result in revenue growth of 14% for 2013 if it continues, he says. This is somewhat higher than the current consensus of 11-12%, which Nomura’s Harry Curtis has also begun to suspect might be at least 200-400 bps on the low side. He wrote on the 18th: “We met with all but one of the concession holders. All are enjoying strong demand trends in 1Q but look forward to even greater EBITDA growth over the next 30 months, as high margin [mass] demand growth outpaces supply growth by 10-15 points.”
Mr Kempf had table games running at a market-wide average of HK$1 billion in daily win through the 17th (MOP1.03 billion/US$128 million), “with little evidence of a slowdown since Chinese New Year ended”.
Writing two days later, Mr Fong was tracking total GGR at a daily average of MOP900 million-1 billion through the preceding four weeks. For the week through the 24th it stood at MOP964 million (US$120.5 million) and MOP1.05 billion (US$131.2 million) for the month.
“We believe that this could become the new base for the sector,” he wrote.
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