Macau Golden Week outlook good amid FX crackdown: CLSA from outlookindia's blog

The Macau foreign exchange (FX) tout “crackdown” appears to have “stabilised”, with “investors’ concerns likely overdone” regarding the city’s casino sector, says a Tuesday report from brokerage CLSA Ltd.


The institution observed that Macau’s August gross gaming revenue (GGR) had grown month-on-month. That data point was subsequent to publicity about enhanced enforcement in Macau and on the Chinese mainland against unlicensed touts that linger near Macau casinos and offer to change Chinese yuan into Hong Kong dollars and vice versa.


On Tuesday the Macau authorities also publicised an update on ‘Thunderstorm 2024′, the latest edition of an annual anti-crime sweep done in collaboration with the mainland authorities and Hong Kong.


CLSA analysts Jeffrey Kiang and Leo Pan wrote in their Tuesday assessment that for the Macau gaming sector, there was a “sign of [a] stabilised crackdown”.


They added: “Despite illicit money exchange crackdown, August GGR increased 6 percent month-on-month to [circa] MOP19.8 billion [US$2.46 billion].”


“Although this should partially be a weaker base in July due to various sports events” that had taken place internationally that month, and had “diluted foot traffic, the actual growth in GGR signals to us that [a] crackdown in Macau should have stabilised,” the analysts observed.


CLSA said such an analysis “echoes” Macau operator Galaxy Entertainment Group Ltd’s management commentary in its interim results briefing in mid-August that “business momentum has been intact in third-quarter 2024 thus far”.


CLSA observed that as “we have more clarity” regarding “the impact from the crackdown, we cut our 2024 calendar-year and 2025 calendar-year sector GGR forecast by 2 percent to US$28.4 billion and US$29.6 billion,” respectively.


The institution’s analysts added: “We are in line with consensus on 2024 calendar year, but 1 percent below consensus in 2025 calendar year.”


The brokerage stated that concerning “October’s Golden Week” – a reference to an approaching week-long holiday in mainland China coinciding with China’s National Day on October 1 – CLSA’s “proprietary data suggest hotel booking” levels had “not trended down”.


The analysts observed that “28 out of 34 hotels” it tracks were “fully booked on the weekend of 5 October”.


The brokerage said its research indicated that the “average room rate” of the hotels it surveyed on the matter was, for October Golden Week, at a level equal to US$499 per night.


The Macau government has proposed criminalising unlicensed money trading in the gaming and non-gaming areas of any casino venue within the city, via an amendment to a draft bill called the “Law to Combat Gambling Crimes”.



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By outlookindia
Added Oct 14

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