Casino income in Macau up but not as much as market bet

Gaming revenue is up for September compared to last year but growth and visitor numbers continue to slow as mainland's outlook dims

PUBLISHED : Friday, 05 October, 2012, 12:00am
UPDATED : Friday, 05 October, 2012, 2:15am

Gambling revenue in Macau rose 12.3 per cent in September from the same month last year but still came in below market expectations at 23.87 billion patacas.

"We expect gaming revenue to grow 15 per cent year on year," CLSA consumer and gaming research analyst Richard Huang said before Macau's Gaming Inspection and Co-ordination Bureau released the data yesterday.

Huang had said the estimate was based on a favourable comparison base as last September's revenue was low compared with other months.

With revenues not growing as expected, shares of five of the six casino operators in Macau dropped between 3.3 per cent and 3.5 per cent yesterday in Hong Kong trading, on a day the Hang Seng Index mostly remained flat.

Sands China fell 3.5 per cent to HK$27.40 while Wynn Macau fell 3.3 per cent to HK$19.96. SJM Holdings dropped 3.5 per cent to HK$16.44, Galaxy fell 3.4 per cent to HK$25.10 while MGM shed 3.4 per cent to close at HK$13.22. Only Melco Crown Entertainment climbed, gaining 2.04 per cent.

Macau's gaming revenue growth has slowed since May in step with a weakening of the outlook for the mainland economy. Revenues inched up 1.5 per cent in July and 5.5 per cent in August, year on year.

Visitor numbers continued to slide. August saw 0.6 per cent fewer visits compared to same time in 2011, contributing to the dip in revenues and triggering competition among the casinos.

"October should be a record month in terms of absolute gaming revenue, but year-on-year gaming revenue growth is likely to decline because of a more difficult comparison base," Huang said. Last October's gaming revenue stood at 26.85 billion patacas.

The "golden week" eight-day public holiday on the mainland that started on the last day of September is expected to boost casino earnings in Macau, the only place on the mainland where gaming is legal.

Fitch Ratings said earlier this week that it had fixed its 2012 growth forecast for Macau's gross gaming revenue at 12 per cent. In July, the ratings agency revised its full-year growth projection to 10-12 per cent from the previous estimate of 15 per cent. It has now decided to go for the top end of the projection band.

Fitch said that for next year, it expected 7 to 8 per cent growth.