A recovery in Macau’s casino sector showed signs of waning in June, with gaming revenue missing estimates amid concerns the initial post-reopening Chinese tourist boom is fading.
Gross gaming revenue rose 513.9% to 15.2 billion patacas ($1.9 billion), according to data released by the Gaming Inspection and Coordination Bureau on Saturday. That compares with the median analyst estimate of a 530% year-on-year increase. Revenue was 2.3% lower than the previous month and a 36% drop from the 2019 level.
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Key Insights
- June’s gaming revenue slowed despite the Dragon Boat festival holiday and high-profile concerts, a sign casinos face an increasingly challenging task in enticing visitors to spend money.
- Macau’s casino operators have stepped up efforts to diversify into non-gaming activities after China’s crackdown on high-rollers almost wiped out the VIP gambling sector that used to contribute half of the city’s gaming revenue. In May, popular South Korean girl group Blackpink performed two concerts at Galaxy Entertainment Group Ltd.’s resort, and Melco Resorts & Entertainment Ltd.’s venue featured top Cantopop star Leon Lai.
- The events have been helpful in stimulating demand, encouraging repeat visits and sourcing new players, said Credit Suisse analysts including Kenneth Fong, who see the activities as a sustainable driver for the casino sector.
- While Macau is still facing long-term risks including China’s anti-gambling campaigns, tightening regulations over casino management and the rise of other potential gaming destinations in Asia, there are also some catalysts that could boost the industry later this year. Local hotels, which faced a severe shortage of labor earlier this year, are opening more rooms and the summer holiday season is one of the peak time for tourists to visit.
Market Performance
- A Bloomberg Intelligence index of Macau casino operators rose 6.8% in June, while the benchmark Hang Seng Index climbed 3.7% in the same month.
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