IAG OCTOBER 2016 web - page 4

It alwayshelps tohavea secondopinion
acau is back! Okay, soperhaps I’m getting a little
bit ahead of myself there. Latest figures from the
Gaming InspectionandCoordinationBureau show
thatMacau’s gross gaming revenue for September
grewby7.4%year-on-year, thesecondconsecutivemonthofgrowth
after August recorded a 1.1% year-on-year improvement.
Taken in isolation, two months of growth is nothing when
compared to the 26 consecutivemonths of decline that preceded
it. It’s certainly too early tobepopping champagne corks.
But itdoes indicate that theMacaugaming industry’s recovery
isnowwell and truly underway. And it certainly suggestsAugust’s
result was no anomaly, aswas claimed by some at the time.
It is understandable that a rise of just 1.1% was treated with
some scepticism although as I noted last month it was, at the
very least, a positive psychological result. It was a number in the
black, so irrespective of the quantum it provided a psychological
difference for people in the industry.
But 7.4% isn’t psychological – that’s a real number. That’s real
year-on-year growth. Sonowwe’vegot apsychological number and
a real number toback it up.
As a result, Macau also saw quarterly GGR grow for the first
time since the second quarter of 2014, rising 1.2% to MOP$55
billion from 1 July through 30September.
Therearesomeobvious reasons for this, namely theopeningof
new supply viaWynnPalace and The Parisian. Nevertheless, there
is also plenty of reason for optimismmoving forward, including
the fact that September’s impressive results just happened to lead
straight into theOctoberGoldenWeek holiday.
Inparticular there is reason for SandsChina to feel goodabout
life right now, with The Parisian performing strongly so far and
providing an extra 3,000hotel rooms for visitors.
According to Union Gaming analyst Grant Govertsen, “We
believe that Sands China heavily marketed The Parisian into
mainland China in advance of the opening and our observations
across Cotai this past month would suggest this has paid
dividends for the company as its central cluster has consistently
felt busy.
“This is backed up by conversations we’ve had with our
contacts on the ground. While room rate surveys have shown
that rates across all of Macau and Cotai are down year-on-year
and remain at bargain levels … we think the discounted room
story is actually driving incremental customers to the market –
another advantage for SandsChinagiven itsdominant amount of
room inventory. September’s GGR story reinforces our view that
Sands China andGalaxy Entertainment are the best ways to play
Macau’s nascent recovery given their outsized exposure to the
September’s GGR ofMOP$18.4 billion is still a longway from
the recordMOP$38billionMacauachieved inFebruary2014, but at
least it is finally headed in the right direction.
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