The number of mainland China tourists coming to Macau under China’s Individual Visa Scheme (IVS) increased 2.6 percent year-on-year in January, show data disclosed on Thursday by the city’s Statistics and Census Service.
Macau welcomed a total of 785,000 IVS visitors last month.
January marked the first month of growth in year-on-year terms of IVS tourist numbers since September 2015, when Macau recorded a slight increase of 0.6 percent in such type of visitors.
February could be the first month of casino gross gaming revenue (GGR) growth in year-on-year terms for the Macau market since May 2014, say two investment houses based on unofficial month-to-date returns.
“Macau’s gaming revenue picked up strong momentum since the latter part of the Chinese New Year holiday, despite a somewhat slow start in the beginning of the Chinese New Year,” brokerage Sanford C. Bernstein Ltd stated in a Monday note.
Analysts Vitaly Umansky and Simon Zhang wrote that, according to industry channel checks, Macau’s GGR for the week from February 14 to 21 was about MOP5.9 billion (US$737.2 million). That implied an average daily rate (ADR) of MOP843 million, an increase compared to estimated ADR of MOP628 million for the first 14 days of February, they said.
“Assuming an ADR of MOP600 million to MOP620 million for the remainder of this month, February GGR would be MOP19.5 billion to MOP19.7 billion, representing a minor year-on-year decline, or potentially positive year-on-year growth,” the two analysts added.
Casino GGR in February 2015 was MOP19.5 billion, according to data from Macau’s casino regulator.
“If February GGR grows year-on-year, it would mark the end of a 20-month consecutive GGR decline that started in June 2014,” Sanford Bernstein’s note stated.
It added: “While it does not necessarily reverse the trend (as we believe March and April may register year-on-year decline again), February GGR is poised to top our earlier estimate (and street consensus), which could provide some upside catalyst to Macau gaming stocks in the near term.”
Analysts David Katz and Brian Davis, from Telsey Advisory Group LLC, also said on Monday that – according to unofficial industry returns – a “marginal monthly improvement year-on-y
ear” was possible for full-February.
Macau gaming specialist Union Gaming said Macau’s transit visa scheme is set to “undergo a significant positive shift at year end.” Being the only Macau-based gaming research shop, Union Gaming is a more authoritative voice in the investment community.
According to analyst Grant Govertsen, under the new scheme, the Macau government is likely to allow a Chinese citizen entering Macau using a transit visa to stay for up to 14 days from 7 days previously, and 7 days from 2 days previously if they are entering Macau for a second time in the same month. Serious Chinese gamblers have used transit visas in the past to enter Macau because they are easier to get than tourist visas.
Govertsen sees the VIP gaming segment to benefit the most from this visa restriction:
Interestingly, we believe the greatest beneficiaries of a relaxed transit visa scheme are those persons who facilitate VIP gambling (junket agents) and to a lesser extent premium mass players themselves. We believe it was junket agents who were the hardest hit when the transit visa restrictions were put in place in July 2014 as agents would generally want to spend as much time in Macau as possible as they want to escort their customers (the gambler) for the duration of the customer’s trip. Further, as we’ve spoken with casino operators over the past year and a half, they have indicated that some of their premium mass players had been negatively impacted by transit visa restrictions.