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Moody’s gives positive outlook on Asia gaming operators due to further recovery

Ratings agency Moody’s has given a positive outlook on gaming operators in Macau and Southeast Asia, citing the growing earnings and cash flow over the next 12-18 months as visitor numbers further improve, boosting revenue.

According to Moody’s latest commentary, the agency expects full-year gross gaming revenue (GGR) in Macau to reach 75-80 percent of pre-pandemic 2019 levels by 2024 and 2025, compared to 63 percent in 2023 and 14 percent in 2022.

Macau May GGR 2024

‘The pace at which revenue improves will slow compared to the surge in 2023 after China ended pandemic border restrictions. But revenue will nevertheless continue to grow as visitor numbers recover further from the pandemic downturn, despite slower economic growth in China this year than last year,’ the report states.

Macau GGR, May 2024

For the gaming sector in Southeast Asia, analysts expect a resurgence of tourist arrivals to support solid revenue growth over the next 12-18 months.

‘One potential risk to this view is that, according to media reports, Chinese embassies have warned citizens against gambling overseas. In a worst-case scenario where Chinese tourist numbers decline significantly, the gaming sectors in Singapore and Malaysia will be less exposed than the Cambodian market,’ the report reads.

Currently, gaming operators in Singapore and Malaysia are less dependent on Chinese tourists than those in Cambodia, and they have significant non-gaming operations, including theme parks and retail. Revenue from Genting Berhad’s operations in Singapore and Malaysia increased meaningfully over the last two years as tourist arrivals from outside China recovered quickly after the COVID-19 pandemic.

In contrast, revenue for Cambodia’s NagaCorp remains well below 2019 levels. Moody’s notes that NagaCorp derived around 60 percent of its revenue from the referral VIP segment before the pandemic, and its collaboration with junket operators resulted in a high proportion of VIP players from greater China.

‘Tourists from China will likely return over time, but we do not expect a significant recovery in the referral VIP gaming segment because of China’s strict regulation of junket operators,’ the report states.

Moody’s expects NagaCorp’s revenue to recover gradually over the next two years to 35-41 percent of 2019 levels. However, EBITDA will recover more strongly to 48-55 percent of 2019 levels, ‘because of the greater contribution from NagaCorp’s mass market and premium VIP segments, which have much higher margins than the referral VIP market. 

NagaCorp also benefits from a sizable expatriate community residing in Cambodia and tourist arrivals from other destinations.’

Viviana Chan
Viviana Chanhttps://agbrief.com/
Viviana Chan is an editor, interpreter, and journalist. With over a decade of experience, she writes in English, Chinese, and Portuguese. Viviana started her career in Macau-based newspapers, where she became passionate about the region's social, financial, and cultural development. Her writing focuses on the economy, emerging industries, gaming development, political affairs, and cross cultural-exchange in the business and cultural domains. She is avid for news and eager to discover and cover stories that generate public relevance.

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