High rollers from China are heading back to Australian casinos

Gaming in Macau. Aaron Tam/AFP/Getty Images

High rollers from China are on their way back to Australia casinos.

Morgan Stanley analysts, who recently met with casino and junket operators in Macau, say the Chinese VIP market is in recovery across Macau, the Phillipines and Australia.

“The resurgence has been driven by a solid Chinese housing market, improving junket balance sheets and cash flows providing credit to customers,” the analysts write in a note to clients.

The Macau gaming tables for VIPs recorded the largest month in three years in October.

Morgan Stanley says Australian VIP growth is set to continue. Both Star Entertainment and Crown Resorts have both recently posted indications that the high roller drought may be almost over.

Here’s how Morgan Stanley sees the return of high rollers to billionaire James Packer’s Crown:

And Star:

“Our recent travels to Macau and feedback from industry contacts confirms that this growth has continued post the trading update and is expected to continue to grow further,” Morgan Stanley says.

“A very large junket provider [luring VIPs with free accommodation, travel and other perks] recorded their highest rolling chip ever for Melbourne in the month of October, whilst business in Sydney for Chinese VIPs is also reported to be growing substantially on last year.

“The view is that visas for Chinese are becoming easier to come by — so the appetite is there for them to travel more and Australia is positioned well to take advantage of this.”

Morgan Stanley is forecasting VIP revenue growth of between 14% and 9% for Star Entertainment and Crown Resorts in 2018.

Crown in August posted a 7.5% fall in annual revenue to $3.34 billion, dragged down by fewer VIP players making big bets at Australian casinos. VIP program play revenue in Australia fell 48.9% in 2017.

However, at the October AGM, shareholders were told Crown Melbourne’s VIP program play turnover exceeded expectations from July.

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