Fitch
issued its latest note just a day after Macau’s Gaming Inspection and
Coordination Bureau announced that the former Portuguese enclave’s VIP gambling
market grew twice as fast as the mass market casino revenue in the first
quarter of this year.
Analyst Alex Bumazhny, Fitch’s Senior Director Corporate Finance, said the report had already taken into account the tougher year-over-year comparisons in the second-half of 2017 and the possibility of China’s implementation of a tight monetary policy.
Increased real estate restrictions – which may slow economic growth on the mainland – will also have little effect on Macau’s GGR for this year, according to Fitch.
"VIP growth
has been exceeding Fitch’s expectations, growing 17% YoY in first-quarter
2017,” the credit rating agency said in a statement. "We expect about equal
contribution from VIP and mass market revenues toward achieving Fitch’s 12%
growth forecast.”
He said the
condition of the Macau VIP segment at present is now becoming similar to that
of 2010. This, according to the Fitch analyst, bodes well for Macau since it
gives the industry "a good amount of headroom for growth permitting regulatory
and other conditions.”
But on the
flipside, the credit ratings agency predicts fixed investments in China to slow
down from 5.7 percent in 2016 to 4.3 percent this year. Fixed investments in
China are considered to be an important driver for VIP gaming.
"Given the
opaque nature of the VIP segment (56% of GGR in 1Q17), forecasting Macau GGR
with a fair amount of certainty is difficult; therefore, we remain cautious,”
Fitch said.
On the
other hand, healthy consumer spending will help the mass market achieve 7.5
percent growth this year.
"Longer term, we believe mass market gaming remains underpenetrated in the Asia-Pacific region. Despite being delayed, pending infrastructure projects, such as the bridge to Hong Kong, a permanent Taipa ferry terminal, a rail link to Zhuhai airport and intracity light rail, should make Macau more accessible,” the firm said.
Source: GMB / Calvynaire
