Goldman Sachs projects an 8 percent year-on-year growth in Macau’s gross gaming revenue (GGR) for 2025, driven by continued strong travel spending from Chinese tourists.
Analysts also referenced another projection from the same institution, which anticipates that travel spending will outpace broader consumption trends in China, with a forecast of 7 percent growth for 2025.
Macau’s casino GGR in 2024 reached MOP226.78 billion ($28.39 billion), marking a 23.9 percent increase compared to the previous year. However, this still lags behind 2019 GGR, which totaled MOP292.45 billion ($36.7 billion).
The investment bank further predicts a 9 percent increase in mass GGR, while VIP revenue is expected to rise by 4 percent. With reduced cost pressures from inflation and competition, Goldman Sachs expects a significant portion of the revenue growth to translate into EBITDA, which is projected to increase by 11 percent year-on-year.
Analysts Simon Cheung, Alpha Wang, Leah Pan, and Dorothy Wong also reported that Macau’s GGR for 4Q24 reached MOP57.4 billion ($7.2 billion), marking a 3 percent quarter-on-quarter increase.
A detailed breakdown of visitation data for November (the most recent available) reveals that the 10 percent year-on-year growth in tourist numbers was mainly driven by day-trippers, who increased by 14 percent compared to a 5 percent rise in overnight visitors.
Additionally, there are signs that more tourists from wealthier regions, such as Beijing (+58 percent), Shanghai (+35 percent), and Zhejiang (+25 percent), are returning to Macau, nearing pre-pandemic levels.
Macau casino stocks end FY24 down by 12%
Macau casino stocks finished FY24 down an average of 12 percent, largely due to concerns over intensified competition, particularly in the high-end premium mass segment, and the ongoing crackdown on illegal money exchangers.
Despite these challenges, the gaming sector in Macau remains one of the most attractive within the broader China travel and transportation coverage universe. Goldman Sachs, in this context, has selected Sands China as a top pick, anticipating that its GGR market share will improve in the coming months with the gradual completion of the Londoner renovation and the resumption of dividends in mid-FY25. However, it is worth noting that Sands China’s GGR share remained subdued in 4Q24.
Galaxy Entertainment, meanwhile, appears particularly appealing in terms of its current valuation. Goldman Sachs believes Galaxy is trading at an attractive level given its performance. While the bank cautions that Galaxy could become a key share donor to Sands China, Goldman Sachs’ research team believes this may not materialize. Thanks to Galaxy’s strong marketing strategies and product innovations, the company is expected to improve its competitiveness in the high-end gaming segment significantly.
Looking ahead, Goldman Sachs notes that investors are likely to focus on two key developments in the coming months: (1) news regarding Hengqin’s future development to support Macau’s non-gaming diversification, especially in light of SJM’s recent announcement of acquiring office floors from its parent company, Shun Tak, with plans to convert them into a 180-room hotel; and (2) updates on Thailand’s integrated resort (IR) legalization, as both Galaxy and MGM China have expressed interest in bidding.
