Macau casinos beat forecasts with smaller revenue decline in July

Macau’s gaming revenue for July registered a smaller-than-expected decline of 4.5 per cent to 17.77 billion patacas from a year earlier, another sign of stabilisation in an industry which increasingly counts on tourists and recreational gamblers, instead of high rollers to revive growth.

Gross gaming revenue, a crucial gauge of the well-being of casinos in the world’s largest gambling hub, dropped for the 26th straight month year on year for July, compared with 15.881 billion patacas in June, according to Macau’s Gaming Inspection and Coordination Bureau.

The 4.5 per cent year-on-year fall narrowed from 8.5 per cent recorded in June, underscoring a possible recovery of Macau’s gaming sector grappling with Beijing’s graft crackdown that had kept away large spenders.

Analysts are waiting to see if signs of hope emerge in the second half as key players Wynn China and Sands China launch new casinos in Macau’s Cotai area, which is home to about a dozen casino resorts.

“The market is more interested in a possible turnaround story in the second half with the openings of two new resorts,”said Angela Han, an analyst with China Merchants Securities.

To reinvigorate their businesses, Macau gaming giants, including Wynn Macau, Melco Crown Entertainment and Galaxy Entertainment, have turned to the mass-market segment, as they built up more shopping complexes and tourist attractions.

Las Vegas Sands, owner of Sands China, said last week its Macau casinos saw increased revenues from mass-market gamblers in June against the previous year, the first growth for about two years.

Billionaire tycoon Sheldon Adelson, who controls Las Vegas Sands, noted that “stabilisation appears to be here” when commenting on his Macau gaming business.

The likelihood of a bottoming-out has sent Macau gaming stocks jumping recently, but Morgan Stanley analyst Praveen Choudhary said in a report that the days-long rallies “are unsustainable, as fundamentals have not improved”.

“The supply-driven demand theory did not work in 2015, competition is rising, and [earnings before interest, taxation, depreciation and amortisation] estimates may fall,” he said.