Macau mass market revenue to reach 120% of 2019 levels, analysts say

Morgan Stanley forecasts Macau’s casino revenue could reach 120 per cent of 2019 levels by 2024 due to a strong recovery of the industry and growing market confidence.

Macau.- Forecasts for the economic direction of Macau’s gaming industry this year remain promising.

A report by Morgan Stanley highlights that the city’s casino revenues from the mass market could reach 120 per cent of 2019 levels by the end of the year.

However, in the report, analysts Praveen K Choudhary and Gareth Leung noted that the city’s gaming stocks fell 15 per cent overall last year. Despite the sector’s EBITDA recovering to 70 per cent of pre-Covid levels, the decline occurred, they explained.

According to analysts, the strong performance of Macau gaming stocks in the first half of 2023 lost momentum in the rest of the year due to concerns that Macau gaming revenue had peaked, and might follow the decline in China consumption. However, Morgan Stanley believes that stock selection will be driven by “mass market share trends” and “operating leverage.”

See also: Macau GGR to rise 20.6% year-on-year in 2024, analysts say

Analysts consider the current sector trading at 10x EV/EBITDA and 10 per cent FCFE yield on their 2024e as attractive. They expect mass gross gaming revenue and industry EBITDA to grow by 25 per cent and 34 per cent, respectively, expressing confidence that the former could even reach at least 120 per cent of the 2019 level by the end of the year.

The forecast is influenced by the recent Golden Week holiday, which saw the city’s GGR hit a range of 105 per cent to 110 per cent of 2019 levels. Furthermore, discretionary sales in mainland China have increased by 30 per cent compared to the 2019 level, as well as the GGR in Singapore and Las Vegas. Analysts have also taken into account the 16 per cent addition to Macau’s hotel room supply compared to 2019.

Earlier this month, Morgan Stanley predicted that Macau’s GGR could rise 28 per cent year-on-year in 2024 and reach 80 per cent of pre-pandemic levels. Morgan Stanley also predicted that Macau’s January GGR will be MOP18.8bn, about 75 per cent of the 2019 level. 

For 2023 as a whole, Macau’s GGR was MOP183.06bn (US$22.75bn). That represented 62.5 per cent of the 2019 figure. December GGR was up 16 per cent month-on-month at MOP18.56bn (US$2.3bn).