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VIP to recover in 3Q in Macau

Morgan Stanley predicted that VIP revenue will recover in the third quarter of the year in Macau.

Macau.- Morgan Stanley has discussed in a recent note that Macau will recover its VIP betting revenue segment in the third quarter of the year. The banking group talked about the improved casino product in nearby destinations and how it could affect Macau’s VIP slowdown.

The group said that VIP business in Cambodia and the Philippines has increased significantly in the last couple of years. Therefore, this might have looked like they were taking share from Macau. “However, if we add Singapore, Australia and Saipan, we realise that the percentage of VIP revenue from regions (other than Macau) has remained fairly stable at around 30% of the total VIP revenue in Macau,” said analyst Praveen Choudhary.

“One cannot blame overseas leakage for recent Macau VIP revenue growth slowdown,” added the analyst. The memo added that there are two main reasons for the VIP slowdown in Macau. “The first one is the liquidity crunch in 2H18 as M1 growth decelerated from 11.9% in the 1Q18. It decelerated 1.7% in the first quarter of 2019.”

“The majority of VIP gaming revenue in the Philippines is proxy betting, which is not allowed in Macau. Thus, it is not a result of cannibalisation. We conclude that Macau VIP revenue could remain resilient despite leakage to ASEAN (Association of Southeast Asian Nations) countries and should recover in the second half of 2019.”

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