Deutsche Bank: bullish outlook for Macau gaming industry

Analysts at Deutsche Bank said gross gaming revenue was up 31 per cent in Q2.

Macau.- Deutsche Bank has released optimistic forecasts for Macau’s gaming industry, highlighting the potential of the market. While acknowledging uncertainties, the bank sees the market as undervalued.

The bank says that as the market fundamentals become clearer, concerns will dissipate, leading to increased confidence in Macau’s growth prospects. It mentioned that there were challenges in the perceived revenue ceiling in both mass and VIP markets and property EBITDA. Nonetheless, Deutsche Bank remains optimistic, stating that geopolitical and macro concerns will likely fade over time.

In second-quarter GGR, the bank’s analysts observed a quarter-on-quarter increase of 31 per cent to approximately US$5.7bn. When compared to pre-pandemic levels in the second quarter of 2019, this was a decline of about 38 per cent, but both mass and VIP GGR showed sequential improvements of over 20 per cent.

Deutsche Bank anticipates that the recovery in mass GGR will continue as market accessibility improves. Furthermore, it expects VIP revenue to exceed earlier predictions. Based on the current performance and considering historical seasonality, Deutsche Bank has projected growth of 2-3 per cent in the third quarter compared to the second quarter and 8-10 per cent in the fourth.

A few days ago, gaming analysts at the Asian IR Expo + Global Gaming Expo (G2E) Asia 2023 in Macau predicted that Macau’s annual gross gaming revenue could reach MOP563.8bn (US$70bn) within the next ten years. That would mean a doubling of pre-Covid-19 GGR recorded in 2019.

During a panel discussion entitled Asia Gaming Landscape a Decade into the Future, analysts emphasised the increasing significance of non-gaming revenue for Macau’s gaming operators. They estimated that it could rise from the current 10 per cent of revenue to account for 25 per cent over the next decade.

Meanwhile, GGR reached MOP4.80bn (US$595.2m) in the first nine days of July alone. This translates to a daily run-rate of over MOP530m, surpassing the second quarter’s MOP500m (US$571.4m) per day.