Macau’s mass market segment is “a freight train underpinning the market recovery,” according to Union Gaming’s Head of Equity Research Grant Govertsen, with first quarter growth almost twice as reliant on mass than official DICJ figures show.
Taking a closer look at the 1Q17 results of Macau’s six concessionaires after Galaxy Entertainment Group, SJM and Melco Resorts all released their figures late last week, Govertsen estimates that mass table gross gaming revenue (GGR) actually grew 15.1% Macau-wide for the first three months of the year – well above the DICJ’s official figure of +7.9%.
Likewise, he believes VIP GGR grew at a more modest 11.2% compared to the DICJ’s +16.8% due to the government’s method of table classification.
“With the benefit of the entire Big 6 having reported, we find that mass table GGR actually grew 15% y/y during 1Q17, which was better than our initial estimate of +11% and significantly better than the DICJ numbers at just under +8%,” Govertsen said in a weekend note, adding that growth appears to have normalized.
“With the benefit of the operator data we now believe that April 2017 at +16% year-on-year was likely much closer to parity with each segment growing roughly 16% rather than VIP +20%.
“This, of course, is further good news for the market as a mass-led recovery is what we (and the government) want to see and gives us greater comfort in our current positioning. We continue to feel very comfortable owning the mass-centric names Galaxy and Sands China as mass remains a freight train underpinning the market recovery.”
Govertsen said that, since the government’s table reclassification scheme kicked off in 4Q14, DICJ data had understated real mass growth rate by an average ~640bps, while overstating VIP growth rate ~470bps.
RelatedPosts
