Gaming revenue in Macau fell for the market’s 20th straight during January but analysts believe the market has stabilized.
Macau’s Gaming Inspection and Coordination Bureau said Monday casinos collected $2.33 billion from gamblers during the month, a dip of 21.4 percent compared to the same month a year ago. The raw number gave hope that Chinese casino market has bottomed out. Monthly casino revenue has averaged between $2.5 billion and $2.1 billion a month since last May.
Analysts said January tends to be a weaker month if Chinese New Year falls entirely into February. The holiday, when the majority of mass-market Chinese gamblers visit over the week-long public celebration, begins this year on Feb. 8.
“January was broadly better than expected and came in modestly better than historical average sequential trends had implied,” said Duetsche Bank gaming analyst Carlo Santarelli.
Macau’s casino market has been a free-fall since the Chinese government began a crackdown on corruption than ensnared operators of several high-end junket businesses tasked with bringing big-spending gamblers to private gambling salons. Meanwhile, the sagging Chinese economy has caused business from the mass-market segment to slow.
“Heading into the back half of January, gross gaming revenue trends had been showing their normal seasonal slowdown in advance of Chinese New Year,” said Union Gaming Group principal Grant Govertsen. “We would highlight that January 2015 represents the most difficult year-over-year comparison to be faced this year.”
Last February, Macau gaming revenue fell 49 percent, a single-month record decline since the market liberalized casinos beyond a one-company monopoly after 2000.
Macau gaming revenue fell to a five-year low in 2015 when casinos collected $28.93 billion, a decline of 34.3 percent. The market hit an all-time record high of $45.2 billion in gaming revenue in 2013.
The monthly results from Macau are watched by the investment community and play a role in the stock performances of Wynn Resorts Ltd., Las Vegas Sands Corp., and MGM Resorts International. The three companies operate casinos in Macau and are all opening multibillion-dollar resorts in the market Cotai Strip region this year.
“We continue to believe the market will remain challenged as significant supply comes online over the next 12 months.” said Wells Fargo gaming analyst Cameron McKnight,
Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said January’s numbers were better than expected, but won’t have any material impact on the investment considerations.
“While we constructively view any relative out-performance at this point, we realize the absolute result remains somewhat depressed; thus, we continue to view the Macau market as a whole through a cautiously optimistic lens,” he said.
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