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China – Macau records best month of growth since February 2014

By - 1 December 2016

Macau’s casinos reported that GGR was up 14.4 per cent year-on-year November, marking a fourth month of consecutive growth and its biggest year-on-year increase since February 2014.

Macau’s Gaming Inspection and Coordination Bureau confirmed that November saw revenue of 18.8bnpatacas ($2.36bn) due to more mass gaming players visited due to the two new casino openings; Wynn Palace and Parisian, both in Cotai.

Before 2014, mass gaming players made up just 30 per cent of Macau’s revenues. They now account for over half.

Sophie Lin, a credit analyst at S&P global ratings, said: “The opening and ramping up of new casinos, better infrastructure connecting Macau with mainland China, and stabilising regulations are the major factors that will fuel a rebound in the gaming industry. We expect most casino operators in Macau to be more prudent with capital investment over the next 12 to 24 months, given that they have fewer new projects in the pipeline and a potentially longer payback period on new casinos. We estimate aggregated capital spending of all six gaming concessionaires in 2017 to be about US$1.5bn lower than that in 2016, resulting in less pressure on cash flow and debt leverage ratios.”

S&P added: Our base case assumes that gross gaming revenue for casino operators in Macau will be flat to 10 per cent higher in 2017, compared with our estimate of a decline of three to six per cent in 2016, and after the sharp drop of 34 per cent in 2015. We also expect EBITDA margins to increase as revenue continues to shift away from VIP gamblers toward the more profitable mass-market gaming segment and as operating leverage improves on the back of revenue recovery.”

Marcus Liu, a gaming analyst at CLSA, said: “Visitation is starting to grow again and more importantly, people are staying longer.”

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