Golden Week lifeline?

2014/9/15

From：Macau Buisness Daily

Deutsche Bank’s gaming report highlights that the junket market continues to be oversaturated, with smaller operators disappearing in Macau. Players here are taking twice the amount of time to repay junkets, while strong bookings from VIP’s for Golden Week is surprising the industry.

The current mass market slowdown is not as bad as it seems, with junket operators going through an almost ‘natural selection’ process whereby big players are standing above water while the smaller fry are on the road to extinction as crackdowns continue and credit in Mainland China becomes harder to obtain.
These were two of the main conclusions arrived at on Macau’s current gaming trends as analysed by Deutsche Bank. It’s been a difficult Summer of diminishing revenues – three months in a row already from June to August – and an Autumn that promises to be not that easy. The smoking ban in casinos scheduled for October 6 is likely to create some additional damage to the industry – from table revenues to operator’s stocks.
Mass market deceleration is one of the latest hurdles the industry must negotiate. The most profitable gaming segment in Macau has dropped from a monthly revenue growth rate of 30 percent – on a year-on-year basis – to less than half. In August, mass revenues climbed 14 percent, according to official data.
Despite the panic among some investors, Deutsche Bank believes that there is no reason for alarm and says a bit of perspective could help. Gaming analysts from the biggest German bank say that overall mass revenue generation and headcounts remain ‘rather solid’ and after several conversations with the industry in Macau they ‘sense little apprehension around mass trends’.

Proper perspective

Despite the slower performance on a year-on-year basis, Deutsche Bank emphasises that using a two-year stack reveals a ‘much more optimistic picture’ about mass market behaviour. In fact, mass revenues are growing at a staggering 50 percent rate every month relative to the same months in 2012.
In August this year, gains from mass floors went up 53 percent compared to 2012 and in May climbed more than 60 percent (see table). ‘We believe grand mass continues to perform relatively well and there’s little to no change in cadence within this segment’, Deutsche Bank wrote in a note to clients.
Nevertheless, in the mass segment premium players are slowing in number and chips played, the report reveals. Fewer conversions from lower and VIP players and a more discrete profile regarding Beijing’s crackdown on corruption and lavish spending are the two main factors cited.

Copyright@Macau Business Daily