Macau’s gross gaming revenue is set to grow by around 12% year-on-year in 4Q17, signaling the start of slowing GGR growth following a third quarter increase of 22%, according to brokerage Sanford C Bernstein.
In a note released on Monday, analysts Vitaly Umansky, Zhen Gong and Cathy Huang estimate FY17 growth of 17%, slowing to 6% in 2018 before slowing further in 2019 on the back of cooling VIP.
“Our 2017 estimate for mass is +12% year-on-year while our estimate for VIP year-on-year growth is +22%,” they state. “For 2018, we estimate 6% GGR growth followed by slower growth in 2019 (partly on back of the smoking ban), before higher mass growth picks up in 2019.
“Our long-term forecast is for mass to achieve a CAGR of ~11% through the end of the decade and for VIP to have a CAGR of ~6%.”
Macau’s recent resurgence has been led by VIP, which grew 35% year-on-year in 3Q17 to MOP$38.7 billion and accounted for 57.7% of all casino revenue.
However, mass market continues to loom as key to the industry’s long-term Macau future with growth over the next few years heavily dependent on new room inventory and improved transportation infrastructure
“Increasing overnight visitation and higher spend per visitor will be the key drivers of continued mass growth,” Bernstein said. “However, we are cautious on VIP – even though 2018 VIP growth may be higher than we estimate today.
“Macro-economic slowdown (in particular money supply growth and real estate pricing) is likely to create headwinds for VIP, while the segment remains exposed to policy risks.”
Bernstein estimates year-on-year GGR growth of 13 to 15% for October, with the average daily rate of MOP$854 million around 20% higher than September numbers due to Golden Week.
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