Nomura: “Slow Grind” Recovery Needed for Macau

Japanese brokerage Nomura has issued a research note saying the likely solution to Macau’s casino gaming troubles could be similar to that for Las Vegas: A “slow grind” recovery based on the mass market, rather than the high roller trade on which Macau as traditionally relied on. The research note noted:

“While the drivers behind the slowdown in Las Vegas are not identical to Macau’s, there are still five key takeaways that we want investors to be aware of… Deteriorating customer mix was the key culprit behind the Las Vegas slowdown; second, returns on invested capital from new casinos declined to 4 percent to 10 percent (versus 20 percent from casinos opened in the 1990s; third, there was limited cannibalisation from new openings; fourth, new casinos took three to four years to ramp up; and fifth, losses at new openings turned out to be temporary.”


“New casino openings (resulting in a 28 percent rise in hotel rooms over 2016 to 2018) and infrastructure improvements (connecting Macau to Hong Kong International Airport, eighth-largest airport in the world) will be key drivers to Macau’s non-gaming growth. But we see significantly less scope for the gaming market to grow, considering gaming penetration in China is largely on par with that of the U.S. overall. Lessons from Las Vegas suggest a slow-grind recovery.”

To read the whole article, Vegas-style grinding recovery for Macau: Nomura, go to the website of GGR Asia. In addition, check out our Macau Casino stock list page.

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