China – Analysts believe Macau will grow in 2017

2017-01-09

Despite Macau’s GGR falling for the third year in a row, analysts believe that 2017 will prove a turning point for the resurrection of the industry’s revenue growth.

Macau’s GGR dropped by 3.3 per cent to 223.2bn patacas (US$28bn) last year, which was in line with analyst forecasts of a drop of three to four per cent. December showed improvement though with GGR increasing by eight per cent from a year earlier to 19.8bn patacas.

Morgan Stanley analysts Praveen Choudhary and Alex Poon said: “We believe the Macau cycle has turned and 2017 could show 10 per cent GGR and 13 per cent EBITDA growth, the first in four years,” the Morgan Stanley analysts said. “And we see both mass and VIP growth tracking better than expected. Infrastructure improvement will drive higher visitation and potentially higher spending per capita. We believe the Chinese government will continue to monitor capital outflows and tighten when necessary. Meaningful depreciation in Chinese yuan against the US dollar could hamper Macau spending per capita, affecting both VIP and premium mass [markets], and also triggering more capital outflow control measures.”

The analysts believe that Wynn Macau and Wynn Palace will see good growth. “We believe the combination of about 30 per cent forecast ebitda growth in 2017 and 4.5 per cent dividend yield for full year 2016 will drive Wynn Macau to outperform in 2017,” they explained.

Grant Govertsen, Managing Director of Union Gaming, added: “After three years of the anti-corruption program in mainland China, some of what we would call the smaller VIP players are coming back to the market.They’re just feeling better about their own situation, and that they’re not going to be caught up in the so called drag net. New casinos opened over the past few months, a ramp-up of marketing programs, and the government’s push into mass market suggest that the segment will remain strong going into 2017.”

Source from: http://www.g3newswire.com/china-analysts-believe-macau-will-grow-2017/

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