Macau Casinos Fall as November Gambling Revenue Forecast Cut

  • Wells Fargo analyst sees November revenue drop up to 34%
  • Melco gains market share since opening of Studio City casino

Macau casino shares fell in Hong Kong after Wells Fargo & Co. cut its forecast for November gross gaming revenue due to worse-than-expected gambling data from the city’s casinos so far this month.

MGM China Holdings Ltd. lost 5.5 percent by the close of trading in Hong Kong while Wynn Macau Ltd. slumped 4.8 percent, both recording their biggest drop since Sept. 29. Galaxy Entertainment Group Ltd. and Sands China Ltd. were down more than three percent. SJM Holdings Ltd. fell 2.5 percent. The benchmark Hang Seng Index was down 1.4 percent.

Average daily revenue came in at 525 million patacas ($65.8 million) in the first eight days of the month, down 36 percent year on year, even after the Oct. 27 opening of Melco Crown’s Studio City casino resort, Wells Fargo analyst Cameron McKnight wrote in a note on Monday. 

The weak-than-expected performance prompted him to cut revenue estimate for November to a drop of as much as 34 percent, compared with his previous forecast for a 30 percent drop. Casino takings may fall 32 percent, according to a median estimate of five analysts surveyed by Bloomberg. That would be worse than the 28.4 percent fall in October.

Macau is experiencing its worst downturn in history, as China’s slowdown and scrutiny of corruption deterred high-stakes VIP gamblers from visiting the world’s largest gaming hub. Total takings at casinos fell for 17th straight month in October with revenue from high-end players dropping 33 percent, according to Bloomberg Intelligence.

VIP volumes so far this month were softer than recent trends, probably due to the segment being "over-stretched" last month during China’s week-long National Day holiday, a peak season for Macau casinos, JPMorgan Chase & Co. analysts led by DS Kim said in a report on Monday.

Studio City resort helped draw mass market customers, boosting Melco Crown’s market share to 14.8 percent in the first eight days of November, the highest since at least May, according to data from Sanford C Bernstein.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE