tatistics showed gross gambling revenue was up 8.8% last month to 21.8 billion patacas ($2.72 billion), compared with a year earlier, beating consensus expectations of gains between 4% and 6%. The increase, which led Macau to its highest revenue in 21 months, followed a 7.4% gain in September and a 1.1% rise in August, year-over-year.
Despite no official breakdown from the bureau, analysts said a greater number of visits from VIP players, as well as a steady stream of mass-market customers, boosted revenue. Demand during the Chinese Golden Week holiday, in the first week of October, was also an important driver of revenue.
“The numbers are better than expected,” said Vitaly Umansky, an analyst at Sanford C. Bernstein.
“My gut says that VIP [demand] has contributed to the upside surprise based on conversations I’ve had over the past two weeks”
Macau has undergone a difficult period, weathering more than two years of sustained declines. China’s widespread antigraft crusade, in addition to its faltering economy, saw visits to Macau from VIP gamblers fizzle out and revenue slump to 230.8 billion patacas ($28.9 billion) in 2015, down from the record high of 360.7 billion patacas ($45.2 billion) in 2013.
Still, the casino industry in Macau appears tentatively to be turning a corner.
“The recovery story is not new news,” said Angela Han Lee, an equities researcher at China Merchants Securities Co. in a note after the previous strong gaming data for September was released.
The market was divided over the degree to which the mid-October detention by authorities in China of 18 employees of Australian casino operator Crown Resorts Ltd. led Chinese high-rollers back to Macau from overseas casinos last month
Crown’s head of international VIP programs, Jason O’Connor, was among those detained.
Many analysts believed the crackdown has been good news for Macau, though.
“Incidents like this one are ultimately a net benefit,” said Grant Govertsen, an analyst at Union Gaming Group, in a research note. “As non-Macau companies shy away from VIP activities in China, albeit perhaps temporarily, this should generally accrue to Macau’s benefit.”
Macau’s revenue growth rate has also accelerated sequentially since August and is likely to show similar results in November, Mr. Govertsen added.
The Hong Kong-listed stocks of Macau’s “Big Six” casino operators responded positively to the revenue data. Among them, Galaxy Entertainment Group Ltd. was 1.9% higher, Sands China Ltd. rose 2.5% and MGM China Holdings Ltd. jumped 3.3%, outperforming the broader Hang Seng Index, which was up 1.2%.
Looking ahead, though, some analysts are waiting for a swath of Macau casino earnings due this week for further solid evidence that the sector truly is at an inflection point.
“We need to wait and see,” said Bernstein’s Mr. Umansky.