Macau to see 115% of 2019 mass revenue in 2024, Morgan Stanley says

It also expects gaming stocks to surpass pre-pandemic levels.

Macau.- Morgan Stanley has reported that it expects Macau’s mass-market revenue to surpass pre-pandemic levels, reaching 115 per cent of 2019 figures next year and 125 per cent in 2025. It has revised its estimate following growth in China’s nominal GDP and the observed recovery rate in Las Vegas.

It estimates property EBITDA to of MOP86.36bn (US$10.7bn) for 2024 and US$11bn for 2025. Its report highlights the positive impact of increasing Chinese air travel on Macau’s tourism industry. Chinese visitation to Macau via air is projected to grow to 116 per cent and 121 per cent of 2019 levels in 2024 and 2025, respectively.

Morgan Stanley notes that there is potential for gross gaming revenue in Macau to exceed consensus estimates in May due to accelerating year-on-year revenue growth. It also predicts a positive trend for local gaming stocks’ earnings revisions, which turned positive at the beginning of the year and are expected to continue rising.

Macau gaming stocks were already generating positive free cash flow to equity (FCFE) in the first quarter of 2023. The industry’s improvement in FCFE is expected to bring it closer to pre-Covid levels from the second quarter onwards.

According to Morgan Stanley, once the industry deleverages, Macau gaming stocks could potentially offer high dividend yields, estimated at 6.8 per cent. Analysts believe that the industry could resume paying dividends sooner if the recovery remains strong.

See also: S&P expects Macau mass market GGR to recover to 75-85% of 2019 levels