New | Macau gaming revenues rebound as casinos bet on tourists
August’s 1.1pc rise ends two-year losing streak as operators shift focus from VIP high-rollers to recreational gamblers
Macau’s gaming revenue for August rose slightly, ending a 26-month contraction streak and underscoring the latest signs of revival for the world’s largest gambling hub.
The first gambling revenue growth since May 2014 marked a much-anticipated bottoming out for Macau, after big-spending VIP punters shunned the former Portuguese colony following Beijing’s drive to root out corruption and curb ostentatious living. Macau is aiming to reshape itself into a destination that appeals to tourists and shoppers as well as high-rollers.
“It is well expected in the sense that summer has always been a good time for Macau casinos as there tends to be a growth in tourist numbers during the holiday seasons,”said Angela Han, a China Merchant Securities analyst.
“There are a huge number of hotel rooms in the upcoming The Parisian property, and its mass market positioning is more likely to fuel the tourist number growth in Macau,”Han said
Company chairman Lawrence Ho Yau-lung - also Macau gaming tzar Stanley Ho Hung-sun’s son -attributed the growth mainly to the special gain from a restructuring of the shareholding structure.
The bottom line was also aided by the opening of Studio City, an entertainment resort which Ho said had shown the casino operator’s “dedication to provide a distinctive portfolio of non-gaming, mass market-focused amenities”.
“Going forwards, as Macau’s gaming industry has seemingly bottomed out and started to stabilise, we
remain cautiously positive about its long-term outlook,” Ho said.
While VIP gaming businesses continue to struggle, the interim earnings posted by most Hong Kong-listed Macau gaming concessionaires over the last month indicate that their mass market segments are becoming a sweet spot.
However, market watchers recently questioned how sustainable and substantial the upward trend would be, and how effectively the well-received “if you build it, they will come” philosophy would work in view of subdued economic growth.
It remains a question mark whether this is truly ‘meaningful’ growth
“It remains a question mark whether this is a truly ‘meaningful’ growth, and the growth for September may be weaker because of a smaller seasonal boost,”Han added.
Gabriel Chan, an analyst with BNP Paribas, projected the growth to be modest given Macau’s tightening regulations on VIP gambling as well as a softening yuan that could curb mainlanders’ spending power.
“We are wary in the near term as these new casinos are likely to drive another round of margin erosion, because of insufficient gaming table allocation...and increasing promotional expenses in the face of heightened competition,” he wrote in a note.
Melco’s shares jumped 8.2 per cent to HK$8.68 on Thursday after the results were announced. The stock has fallen 23 per cent in the last 12 months.
