November GGR will fall MoM and growth will slow sequentially. That in and of itself should not be alarming.
November may be a telling month for Macau as it can be considered very normal. There are no holidays to boost revenues. However, November may also bring some volatility and confusion and potentially disappointing investor sentiment. The month should display a substantial decline from October’s record results and YoY growth rate. However, the sequential slowdown shouldn’t ring alarm bells unless it is more severe than our projections. We use two methodologies to derive expected November Gross Gaming Revenue (GGR) YoY growth of 25-30%.
1) November GGR would rise 30% YoY to just under HK$22 billion based on September and October GGR, seasonally adjusted. We analyze seasonality based on revenue from the previous 2 months, adjusted by seasonal factors, for mass revenue, hold-adjusted VIP revenue, and slot revenue.
2) Using the average daily revenue of the last two weeks of October and taking into account the number of weekend and weekdays, we project November GGR to grow 25% to just over HK$21 billion.
With October growing 40% to HK$26 billion, we believe a 15-20% sequential decline may concern some people. However, we would consider it “as expected” and not indicative of a credit/liquidity/macro fueled slowdown. October was an outstanding month with a rocket ship golden week that contributed to full month GGR growing 26% over September. Hopefully, investor expectations are appropriately in check.