MGM-Macau VIP Revenue At 5 Year Low

In a report published Friday, Daiwa Capital Markets analyst Jamie Soo maintained an Outperform rating on

(HKG: 2282). The stance on the overall Macau gaming industry was maintained at Neutral. MGM China is a leading player in Macau's gaming industry and its strength lies in its defensive cost profile. In the report Daiwa Capital Markets noted that the Macau gaming industry's gross gaming revenue or GGR for June 2015 was down 36 percent year on year to MOP17.4 billion, with the average daily run rate of MOP 579 million (-12 percent month on month), the lowest since November 2010. "Our adjusted estimates indicate that mass GGR declined by 28% YoY and VIP GGR was down by 43% YoY. The VIP rolling volume saw a 53% YoY decline. We forecast the industry GGR to decline by 34% YoY in July," analyst Jamie Soo mentioned. The VIP rolling run rate remained soft and declined by 14 percent month on month to HKD 8.2 billion per day in June, the lowest since November 2009. The decline in VIP rolling on a year on year basis was 53 percent at HKD 246 billion, while reported VIP revenue was lower by 39 percent at HKD 9.3 billion. "After accounting for table reclassifications, we estimate that VIP revenue fell by 43% YoY," Soo added. The recent changes to Macau's visa policy are unlikely to have a significant near-term impact on GGR, as underlying fundamentals remain weak, the report mentioned.