Macau’s total gaming revenue (GGR) in November could lead to a year-over-year decline of between 14% and 20% due to continued weakness in the VIP segment and a slump in the popular market table gaming segment, according to three research institutes.
Credit Suisse AG in Hong Kong and Wells Fargo Securities LLC in New York say weakness in the popular sector could also be detrimental to the overall margins of the Macau gambling market.
Potential risks to margins mentioned by the industry include higher player reinvestment rates, particularly in the premium mass sector, i.e., incentives casino companies must offer players to get and retain their business.
Although the mass market is considered to be a much higher margin area than VIP, this mass is also subdivided into ‘mass mass’ or ‘base mass’, which provides a different margin than premium mass. Premium mass players typically benefit more from free goods and services than basic mass due to higher play volumes than grind trading.
Credit Suisse analysts Kenneth Fong and Isis Wong said in a note on Tuesday: “…Despite the worst year-over-year growth trend across the entire GGR in October, [Makau] sees more [monthly] street earnings downgrade as bulk sales begin to fall into negative growth territory. A slowdown in bulk sales could also hurt fourth-quarter margins that have not yet been factored into the streets.”
In a commentary on Tuesday based on unofficial industry returns for the first 10 days, Wells Fargo’s Cameron McKnight said: “As per our checks, holdouts are normal, but volume sales are still weak (negative).”
“…the bulk sector will be under margin pressure as business competition intensifies due to slower growth,” he added.
Sam Levenson, senior vice president of investor relations at Las Vegas Sands Corporation, the parent company of Macau casino operator Sands China, cited “over 45% margins” in the “base mass” segment during a quarterly earnings conference call on October 15.
But the executive added: “I think we all know there’s competitive pressure in the premium mass sector. I think anyone who’s been to Macau recently would hear that.” 안전한 카지노사이트
In the call, Las Vegas Sands noted its premium mass margin was “30%.”
“Macao VIP margins are healthy and commission rates are not going up,” Daniel J. Briggs, vice president of investor relations, said on the same call
Credit Suisse’s research team on Tuesday said gross profit in November could fall 14% to 18% if average daily earnings (ADR) for the rest of November is $820 million to $880 million, including unofficial earnings from November 1-9.