Gaming Better In February, But Deutsche Bank Sees Trouble In March

Deutsche Bank said the gaming revenue trends were better in February, but sees a reversal in trend for the month of March.

This is a negative read-through for gaming companies such as Las Vegas Sands Corp. LVS, Wynn Resorts, Limited WYNN, Melco Crown Entertainment Ltd (ADR) MPEL and MGM Resorts International MGM.

For the month of February, gross gaming revenue (GGR) of $2.443 billion was down 0.1 percent from last year and 4.5 percent from January. GGR of $84.3 million per day was about 13 percent higher than the win per day experienced over the last 6 months.

Year-to-date, GGR per day of $78.7 million compares to a win per day of $91.8 million over the same period last year (-14.3 percent) and the 2015 annual GGR per day of $79.2 mm (-0.6 percent).

But, analyst Carlo Santarelli said history shows there is a sequential decline in March GGR and trends indicate that GGR should fall about 8 percent from last year.

"Over the last six years, win per day in March, on average, has been down roughly 5.5% from February. If we were to assume a 5.5% sequential decline from the February win per day for the 31 days in March, we would expect an ~8% y/y decline for the month," the analyst said.

However, the timing of Chinese New Year creates an influence on the trend. The holiday periods, given the influx of mass visitors and constrained VIP activity, are a bit more robust, on a relative basis, to the surrounding periods.

"Thus, we expect a break from the sequential implied trend and we are forecasting a y/y decline for March of -9.6%," Santarelli added.