Morgan Stanley says money exchange crackdown could impact Macau casino EBITDA

Analysts believe EBITDA growth will continue to slow this month.

Macau.- Analysts at Morgan Stanley have indicated that Macau’s gaming sector EBITDA growth is experiencing a slowdown that started in June and will continue this month due to mainland China’s crackdown on money exchange. Praveen K. Choudhary, Gareth Leung, and Stephen W. Grambling say the second quarter saw the first negative quarter-on-quarter growth in mass gross gaming revenue (GGR) and corporate EBITDA since the post-COVID-19 reopening.

Their forecast indicates a 2 per cent quarter-on-quarter decrease in mass GGR to 113 per cent of the 2019 level. Corporate EBITDA is projected to drop by 7 per cent quarter-on-quarter to 80 per cent of the pre-pandemic level. As such, a 5 per cent half-year over half-year growth is needed in the second half of the year to achieve the full-year 2024 consensus.

Last month, China’s Ministry of Public Security called on security forces in Macau and the mainland to enhance cooperation to dismantle the network of criminal syndicates involved in illicit money exchange.

Macau reported a 122 per cent increase year-on-year in gambling-related crimes in the city in the first quarter of the year. Fraud accounted for 21.7 per cent of cases, with 76 instances, followed by loan sharking at 17.9 per cent. Cases involving illegal money exchange were still strongly associated with fraud.

See also: Macau GGR reaches US$478.8m in first 7 days of July