Citigroup has revised its projections for Macau’s gross gaming revenues (GGR) for September, lowering its estimate from MOP$18.25 billion to MOP$17.75 billion. This adjustment, which translates to a reduction from approximately US$2.27 billion to US$2.21 billion, comes amid reported declines in GGR observed over the previous week. Analysts George Choi and Ryan Cheung have provided insights into these developments, citing specific metrics and trends influencing this downward revision.
Current GGR Trends in Macau
As of mid-September, GGR for the first 15 days has been estimated at MOP$8.5 billion (approximately US$1.06 billion). This figure indicates a daily average of MOP$536 million (US$66.8 million) for the period from September 9 to 15, reflecting a 10% decline compared to earlier weeks in the month. Such trends suggest that the gaming sector in Macau is experiencing a slowdown that warrants attention.
Breakdown of Revenue Components
The decline in GGR is attributed to lower volumes across both VIP and mass markets. Analysts report an 8% to 10% drop in VIP gaming volumes month-on-month, while mass market volumes have decreased by 10% to 12%. Additionally, a notable decline in VIP hold rates has been observed, further impacting overall revenue. This combination of factors highlights a concerning trend for the gaming sector in Macau as it seeks to recover from previous downturns.
Possible Reasons for Declining Revenue
Despite the current softness in gaming revenues, the analysts suggest that this may be a temporary phenomenon. One of the contributing factors to the decline could be the timing of the Mid-Autumn Festival, occurring from September 15 to 17. It is suspected that many potential visitors may have chosen to postpone their trips to Macau until the festival period, which could lead to a surge in gaming activity once the holiday commences. This potential for increased visitor numbers during the festival may mitigate some of the losses seen earlier in the month.
Revised Revenue Forecast for September
In light of the observed trends, Citigroup has conservatively adjusted its GGR forecast for September 2024. The analysts project a daily run-rate of MOP$617 million (US$76.9 million) for the remainder of the month. This revised forecast, while lower than previous estimates, still signifies a 19% improvement over the same period in 2023. Furthermore, it represents approximately 80% of the GGR levels seen in September 2019, indicating a gradual recovery trajectory for Macau’s gaming industry.
Citigroup’s revision of Macau’s gaming revenue estimates underscores the ongoing fluctuations in the region’s gaming market. While current trends show a decline, there are signs that this may be temporary, particularly with upcoming events like the Mid-Autumn Festival. The revised forecast, although conservative, highlights the resilience of the sector, suggesting potential growth relative to previous years.