Sun City opens junket rooms in Philippines–Macau policies may be reason
Sun City is currently the largest junket in Macau with a historic share of the lucrative market in the 25-30% range. They recently began expanding operations in the Philippines. Analysts are worried that this may hurt the Special Administrative Region’s economy as the company could decide to take VIP players to Manila.
According to a report on Macau Business Daily, Credit Suisse researchers note that Sun City has recently opened VIP rooms in the Philippines in May and that further business could be shifted to this new outlet and will overall hurt the Macau demand more.
The researchers say that they predict Macanese gaming revenue to decrease 36-37% year on year in May. Revenue would then range from MOP20.4 to MOP20.6 billion. Another factor that may be driving VIP players away from Macau is the approval over the full smoking ban in casinos.
Credit Suisse suggests that investors should be careful in the Macau gaming industry. This is because of “unsupportive policy headwinds”, which include the uncertainty of gaming table allocation for new casinos, the low flexibility on labor reduction, the application of the full smoking ban and discussions surrounding visitation caps.
In other developments, it is expected that The People’s Bank of China’s cutting on benchmark deposit and lending rates will have limited impact.
First quarter results across all properties in Macau were dismal showing a year on year drop for the quarter of over 37% – from MOP133.5 billion to MOP83.9 billion. Sands China saw the biggest drop with a hemorrhaging of 54.2% of profits.