Macau’s gross gaming revenue (GGR) for November is expected to drop 13.5 percent from October, primarily due to seasonality and the impact of the Macau Grand Prix, according to Bank of America.
In the latest investment memo, analysts from Bank of America Securities project that November’s GGR will reach MOP18 billion ($2.25 billion). This represents a month-on-month decline but a year-on-year increase of 12.1 percent.
This figure accounts for approximately 78.6 percent of the GGR recorded in the same month of 2019, highlighting a modest recovery compared to pre-pandemic levels.
The anticipated drop in GGR is largely attributed to seasonal trends, as November’s GGR typically falls more than 10 percent below October’s figures. In fact, in 2023, November experienced a decline of 17.7 percent month-on-month.
Furthermore, the Macau Grand Prix, scheduled to take place from November 14th to 17th this year, is again expected to disrupt GGR figures based on historical patterns.
Despite these challenges, analysts note that the Macau gaming sector’s GGR has held up better than feared, particularly in light of the ongoing slowdown in consumer spending in China. This resilience contrasts with the more significant valuation corrections observed in other consumer sectors across the region, especially for investors focusing on price-to-earnings ratios rather than earnings before interest, taxes, depreciation, and amortization (EBITDA) valuations.
October also saw Macau record its highest GGR in 57 months, with total revenue growing 7 percent year-on-year and 20 percent month-on-month, reaching MOP20.8 billion ($2.5 billion).
In a separate note from Citigroup, analysts highlight that the 71st Macau Grand Prix is scheduled to return to a four-day format, as opposed to the six-day event held over two weekends in 2023. This change is expected to result in less disruption to casino operations.
Dividend yield becomes important
Bank of America also notes that, given the current situation, the dividend yield is becoming ‘increasingly important’ for investors in this slow-growth sector.
Analysts express a favorable outlook for certain operators, particularly Galaxy Entertainment, which boasts strong balance sheets and steady market share. They also highlight Sands China, which is expected to see a margin recovery in 2025 following the completion of renovations at Londoner II, along with the potential resumption of dividend payments.
