March gross gaming revenue could plummet 41% y/y

Amid weakening of average daily table revenue.

It has been reported that average daily table revenue in Macau gaming has weakened to HK$625mn for 1-8 March.

According to a research note from Barclays, this was a drop from the previous reporting period of 24-28 February, which saw HK$1.0bn in daily table revenue.

Further, Barclays noted that March GGR could see 41% y/y decline. It said that if it is assumed that the daily table revenue will be at HK$625mn for the rest of month plus Barclays' slot revenue full month assumption of HK$0.8bn, then the gross gaming revenue for March would be down 41% y/y at HK$20.2bn.

Here's more from Barclays:

We believe that y/y declines could last until positive growth resumes some time in 4Q15 with lower base comparisons and new casinos ramping up. Moreover, we believe consensus revisions to revenue and margin assumption could continue.

We see risks to our industry GGR forecasts, including VIP revenue momentum continuing to soften; the conclusions of the government’s 2Q gaming regulatory review, for which we expect to hear about the timing and extent of any potential full smoking ban; and likely clarity table allocations for at least the upcoming Galaxy Phase 2 opening.

With potentially weak GGR numbers for March and the gaming regulatory review coming up, we note there could be enhanced opportunities to accumulate on selected Macau gaming stocks. Our preferred stocks remain Galaxy and Melco Crown, both rated Overweight.