MS - Mass GGR to decline in Q2 | LVS, Gaming, & Transocean Forum

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MS - Mass GGR to decline in Q2 Jun 25, 2024 6:51:15 GMT -5 birdnest likes this

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Post by Blitz on Jun 25, 2024 6:51:15 GMT -5

MORGAN STANLEY SEES MASS GAMING REVENUE DECLINE IN Q2

- TUESDAY, JUNE 25, 2024 - 11 HOURS AGO NO COMMENTS 1,105 VIEWS
macaudailytimes.com.mo/morgan-stanley-sees-mass-gaming-revenue-decline-in-q2.html

Macau’s casino industry is facing a mixed outlook for the second quarter of 2024, with Morgan Stanley predicting a decline in mass-market gross gaming revenue (GGR) and potential downside to consensus earnings expectations for the operators.

According to the banking group’s analysis, Macau’s mass-market GGR “could be down 2% to 3% quarter-on-quarter” when the final numbers are in for the second quarter. The analysts expect Macau’s GGR for June specifically could narrow by as much as 11% month-on-month, reaching MOP18 billion. This comes after May delivered the best monthly GGR since the onset of the COVID-19 pandemic in early 2020.

The assessment is in line with a June 10 report from brokerage CLSA Ltd, which indicated player rebates and other player reinvestment in the Macau casino market had been growing faster, percentage-wise, quarter-on-quarter than market-wide GGR.

In the first quarter of 2024, revenue from mass-market baccarat stood at nearly MOP34.59 billion, up 3.1% sequentially, representing circa 60.3% of market share. Overall, the mass-market segment – including slot machines – accounted for 74.9% of Macau’s total casino GGR.

Morgan Stanley observed its research indicated overall Macau GGR was “tracking down 1% to 2% quarter-on-quarter” in the second quarter.

“Consensus expects second-quarter property EBITDA at USD2.1 billion (+2% quarter-on-quarter, -2% quarter-on-quarter on a hold-adjusted basis),” the institution noted, adding that it sees “downside to this number.”

The analysts provided specific reads on each of Macau’s six casino concessionaires regarding the second quarter. They see the most downside to Sands China’s EBITDA due to ongoing construction disruptions at The Londoner Macao, but expect Galaxy Entertainment Group and SJM Holdings to achieve EBITDA growth of 9% and 8% respectively.

“We remain selective on stocks,” Morgan Stanley said. “We prefer Galaxy (share gain) and MGM China (market is being too pessimistic) for 2Q results.”

The banking group’s assessment comes as the Macau casino market continues to navigate its recovery from the COVID-19 pandemic. While the mass-market segment has been a bright spot, the potential decline in GGR and rising costs could impact the operators’ bottom line in the second quarter.

Morgan Stanley’s analysis highlights the need for the industry to closely monitor market trends and adapt their strategies accordingly to weather the challenges ahead.

Victoria chan

Last Edit: Jun 25, 2024 6:51:50 GMT -5 by Blitz

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MS - Mass GGR to decline in Q2 Jun 25, 2024 7:09:20 GMT -5 birdnest likes this

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Post by Blitz on Jun 25, 2024 7:09:20 GMT -5

JP Morgan: Macau weekly GGR estimated at lowest level in six months

by Ben Blaschke Tue 25 Jun 2024 at 06:09
www.asgam.com/index.php/2024/06/25/jp-morgan-macau-weekly-ggr-estimated-at-lowest-level-in-six-months/

Macau’s gross gaming revenues have fallen to their lowest level in more than six months in June, with GGR for the first 23 days estimated at MOP$13.3 billion (US$1.65 billion) or MOP$578 million (US$71.9 million) per day, according to JP Morgan’s weekly channel checks.

This suggests the daily run-rate fell to MOP$514 million (US$63.9 million) over the past week, the lowest level in over six months, with JP Morgan analysts stating the decline “was mostly due to soft seasonality” – impacted by post-holiday slow-down, the apparent impact of UEFA Euro 2024 and poor VIP win rate.

“June is the seasonally weakest month of the year anyway,” the investment bank added, “but the print was still disappointing as it suggests modest downside risk to our monthly GGR forecast of MOP$17.5 billion to MOP$18 billion (US$2.18 billion to US$2.24 billion).

JP Morgan estimates mass GGR to be at 105% of pre-COVID levels through the first 23 days of June with VIP in the low-20% range.

“For 2Q to date, the print suggests GGR is likely to edge down 2% to 3% quarter-on-quarter, led by -2% in mass and -5% in VIP, in-line with our printed forecasts,” the analysts said.

Last Edit: Jun 25, 2024 7:09:35 GMT -5 by Blitz

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MS - Mass GGR to decline in Q2 Jun 25, 2024 7:18:25 GMT -5 birdnest likes this

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Post by Blitz on Jun 25, 2024 7:18:25 GMT -5

And now this as a point counterpoint...

Macau ops soar on China, SE Asia ops less so: Moody’s

Jun 25, 2024 Newsdesk Latest News, Macau, Rest of Asia, Singapore, Top of the deck
www.ggrasia.com/macau-ops-soar-on-china-se-asia-ops-less-so-moodys/

Casino company earnings and cash flow should improve over the next 12 to 18 months as visitor numbers continue to recover post pandemic, particularly in Macau, says a Monday report from Moody’s Ratings. But the institution says the outlook is less clear for other Asian-region casino jurisdictions due to reports of the Chinese government encouraging mainland residents not to gamble overseas.

Moody’s observes however that the Resorts World Sentosa and Marina Bay Sands casino duopoly in Singapore, and the monopoly in Malaysia at Resorts World Genting, will probably face lower risk from such a factor than other places in Southeast Asia, including Cambodia. That, it says, is because of Singapore’s proportionately more modest exposure to Chinese tourism, and the fact its casino resorts have plenty of non-gaming attractions.

The report authors stated: “We expect full-year gross gaming revenue (GGR) in Macau to reach 75 percent to 80 percent of pre-pandemic levels in 2019 over 2024 and 2025, compared with 63 percent in 2023 and 14 percent in 2022.”

They added regarding Macau, the only place in China to have legal casino gaming: “The pace at which revenue improves will slow compared with the surge in 2023 after China ended pandemic border restrictions.” The 2024 improvement would be “despite slower economic growth in China this year than last year”.

Moody’s noted that in first quarter 2024, Macau GGR was 75 percent of 2019 levels and tourist arrivals to the city increased by 79 percent year-on-year.

The institution said that in the first three months this year, GGR from the mass-market segment was 110 percent of 2019 levels. “We expect this figure will increase to 115 percent by 2025, with premium mass-market customers driving the growth.

“In contrast, we expect strict regulations for junket operators to continue to curtail growth” in Macau’s VIP gaming market, said the Moody’s paper.

Risks, lower leverage

For Southeast Asia however, a “potential risk” to recovery rate for tourism and casino revenue was that “according to media reports, Chinese embassies have warned citizens against gambling overseas”.

But Moody’s added: “In a worst-case scenario where Chinese tourist numbers decline significantly, the gaming sectors in Singapore and Malaysia will be less exposed than the Cambodian market.

“Gaming operators in Singapore and Malaysia are less dependent on Chinese tourists than those in Cambodia and they have significant non-gaming operations, including theme parks and retail.”

Moody’s stated that while in 2023, revenue for Genting group’s operations in Singapore and Malaysia reached 97 percent and 91 percent of 2019 levels respectively, overall tourist arrivals from China were less than 50 percent of 2019 levels in Singapore and Malaysia.

But for NagaCorp Ltd, which runs the NagaWorld complex, a casino monopoly in the Cambodian capital Phnom Penh, revenue “remains well below 2019 levels,” said Moody’s. “NagaCorp derived around 60 percent of its revenue from the referral VIP segment before the pandemic, and its collaboration with junket operators resulted in a high proportion of VIP players from greater China,” noted the rating agency.

The institution observed that while “tourists from China will likely return over time,” it does “not expect a significant recovery in the referral VIP gaming segment because of China’s strict regulation of junket operators”.

Moody’s expect NagaCorp’s revenue to “recover gradually” over the next two years to between “35 percent and 41 percent of 2019 levels”.

The casino firm’s earnings before interest, taxation, depreciation and amortisation (EBITDA) however “will recover more strongly” to between 48 percent and 55 percent of 2019 levels, suggested the institution.

It stated: “This is because of the greater contribution from NagaCorp’s mass market and premium VIP segments, which have much higher margins than the referral VIP market.”

Moody’s outlined that as earnings and cash flow “continue to improve”, gaming operators in Macau and Southeast Asia “will be able to pay down more of the pandemic-era debt they built up between 2019 and 2022″.

“As a result, companies’ adjusted debt/EBITDA will decline to levels in line with their ratings, if it has not done so already,” it added. “Macau-focused gaming companies have more scope than peers to reduce leverage as earnings and cash flow improve over 2024 and 2025.”

Last Edit: Jun 25, 2024 7:21:40 GMT -5 by Blitz

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MS - Mass GGR to decline in Q2 Jun 26, 2024 4:13:09 GMT -5

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Post by Blitz on Jun 26, 2024 4:13:09 GMT -5

JP MORGAN: GGR FALLS TO SIX-MONTH LOW IN JUNE

- WEDNESDAY, JUNE 26, 2024 - 8 HOURS AGO NO COMMENTS 907 VIEWS
macaudailytimes.com.mo/jp-morgan-ggr-falls-to-six-month-low-in-june.html

Macau’s gross gaming revenues (GGR) have fallen to their lowest level in more than six months in June, with GGR for the first 23 days estimated at MOP13.3 billion or MOP578 million per day, according to JP Morgan’s weekly channel checks.

“This suggests the daily run-rate fell to MOP514 million over the past week, the lowest level in over six months,” wrote JP Morgan’s analysts DS Kim, Mufan Shi and Selina Li.

The JP Morgan analysts attributed this decline mostly to soft seasonality, such as post-holiday slowdown and the impact of UEFA Euro 2024, as well as poor VIP win rates. They also noted that June is typically the seasonally weakest month of the year.

Despite the decline, JP Morgan still forecasts June’s GGR to reach between MOP$17.5 billion and MOP18 billion. For the second quarter to date, GGR is likely to edge down 2% to 3% quarter-on-quarter, led by a 2% decline in mass and 5% in VIP.

In May, Macau’s mass GGR reached an all-time high at 115% of pre-COVID levels, according to JP Morgan. The bank noted that GGR in May jumped nearly 30% year-on-year to MOP20.2 billion, implying a daily run-rate of MOP651 million.

On the contrary, according recent report from Moody’s Ratings, Macau’s casino industry is poised for a stronger recovery in earnings and cash flow over the next 12 to 18 months when compared with other Asian gaming markets. This is driven by an expected rebound in visitor numbers as the region continues to emerge from the pandemic. However, the outlook is more uncertain for casinos in other parts of Asia as the Chinese government appears to be discouraging its citizens from gambling overseas.

The report states that Moody’s expects full-year gross gaming revenue (GGR) in Macau to reach 75% to 80% of pre-pandemic 2019 levels by 2024 and 2025, compared to just 63% in 2023 and 14% in 2022.

“The pace at which revenue improves will slow compared with the surge in 2023 after China ended pandemic border restrictions,” the report authors noted. They added that the 2024 improvement would be “despite slower economic growth in China this year than last year.”

Moody’s observed that in the first quarter of 2024, Macau’s GGR was already 75% of 2019 levels, and tourist arrivals to the city increased by 79% year-on-year. The report also found that mass-market GGR in the first three months of 2024 was 110% of 2019 levels, and is expected to reach 115% by 2025, driven by growth in the premium mass-market segment.

However, the report warned that strict regulations for junket operators are likely to continue to curtail growth in Macau’s VIP gaming market.

In contrast, the outlook for other Asian casino markets is less certain, with Moody’s noting a “potential risk” to recovery rates for tourism and casino revenue due to reports that “Chinese embassies have warned citizens against gambling overseas.”

The report stated that gaming operators in Singapore and Malaysia will be less exposed to this risk than those in Cambodia, as they are less dependent on Chinese tourists and have significant non-gaming operations.
TC/NS

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MS - Mass GGR to decline in Q2 Jun 26, 2024 4:20:53 GMT -5

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Post by Blitz on Jun 26, 2024 4:20:53 GMT -5

Macau GGR weakens due to seasonality and Euro 2024

Viviana Chan - June 25, 2024
agbrief.com/news/macau/25/06/2024/macau-ggr-weakens-due-to-seasonality-and-euro-2024/

Macau’s gaming performance in June has been affected by softer seasonality and likely the football tournament in Europe, according to UBS in its latest market check memo.

Macau’s gross gaming revenue (GGR) averaged MOP514 million ($63.92 million) per day in the last week (June 17th to 23rd), which is nearly 65 percent of the 2Q19 level. Meanwhile, the mass market performance remains strong at 90-95 percent of 2Q19 levels.

These figures represent a further decline from the previous week’s MOP533 million ($66.3 million) per day. In addition to seasonality and Euro 2024 factors, UBS also mentions a lower VIP hold rate.

In its investment memo, UBS notes that month-to-date GGR has fallen to MOP578 million ($71.9 million) per day, down about 11 percent month-on-month, slightly below the June seasonality average of a 9 percent decrease observed from 2015 to 2019.

Breaking down the segments, mass GGR was down 10-12 percent month-on-month, while VIP volume decreased by about 10 percent month-on-month, with a VIP hold rate of 2.6-2.8 percent.

Despite the weakened gaming market in June, hotel booking data show positive momentum for the upcoming summer season. According to data from 33 hotels tracked by UBS, one-month-forward hotel prices have risen for the summer holiday period, reaching HK$3,400 ($435) per night, marking a 4 percent increase week-on-week and a 15 percent increase year-on-year.

Analysts anticipate that visitor growth will be supported by the Individual Visit Scheme (IVS) expansion to eight additional cities and increased flight capacity during the summer.

In another investment memo, analysts from Citigroup revise down the June GGR projection from MOP18 billion ($2.24 billion) to MOP17.25 billion ($2.15 billion), effectively implying a MOP564 million ($70.2 million) per day run-rate for the remainder of the month.

Macau’s May GGR hit the highest level since the city’s borders reopened in January 2023. The city’s GGR grew by 29.7 percent year-on-year to MOP20.19 billion ($2.51 billion) in May. These results benefited from the Labor Day holiday period, a five-day public holiday in mainland China. Macau received approximately 605,000 tourists during the holiday.

For the first five months of 2024 combined, GGR amounted to MOP96.06 billion ($11.9 billion), up 47.9 percent year-on-year.

Last Edit: Jun 26, 2024 4:22:11 GMT -5 by Blitz