CLSA has lowered its 2026 Macau gross gaming revenue (GGR) forecast by 1 percent and cut target prices across the sector, citing a tougher comparison base, limited incremental growth drivers and expectations of slower momentum for the remainder of the year.
In a report published on Friday, analyst Jeffrey Kiang said the brokerage now expects Macau GGR to grow 4 percent year-on-year in 2026 to MOP257.3 billion ($31.9 billion), down from its previous estimate of MOP259.9 billion ($32.2 billion). Forecasts for 2027 and 2028 were left unchanged at MOP271.5 billion ($33.6 billion) and MOP282.7 billion ($35.0 billion), respectively.
‘With limited room for positive surprises, we trim our 2026 GGR forecast by 1 percent,’ Kiang wrote.
CLSA said Macau’s gaming sector delivered a stronger-than-expected first quarter, but noted that the second quarter is typically a lower season for the market. The brokerage expects sector EBITDA to decline sequentially from the first quarter as revenue growth moderates.
World Cup and soft VIP hold pose near-term risks
CLSA also highlighted the potential impact of the FIFA World Cup, which runs from June 11th to July 19th, on visitation and gaming activity.
According to the report, the tournament could divert some customer traffic away from Macau, although the magnitude of any impact remains difficult to quantify.
The brokerage further pointed to weaker VIP win rates in the second quarter to date. Industry VIP hold has ranged between 2 percent and 3 percent, compared with a theoretical level of around 2.85 percent and a normal range of about 3 percent.
A lower-than-normal VIP win rate is generally margin dilutive because operators generate less gaming revenue while continuing to incur costs associated with attracting customers.
Rising capex to weigh on free cash flow
Beyond revenue growth, CLSA said increasing capital expenditure is expected to pressure free cash flow across the sector over the next two years.
Industry capex is projected to rise from $2.06 billion in 2025 to $3.79 billion in 2026 before remaining elevated at $3.66 billion in 2027. As a result, free cash flow generation in 2026 and 2027 is expected to be lower than in 2025.
The brokerage noted that competition among operators continues to intensify, as several concessionaires move ahead with major property upgrades and new investment plans.
Sands China is expected to start room refresh works at The Venetian Macao, while Wynn Macau plans to develop Wynn Enclave, a new luxury hotel tower near Wynn Palace. CLSA said these projects, together with higher non-gaming investment commitments across the sector, are expected to keep capex elevated in 2026 and 2027.
Reflecting the revised earnings outlook, CLSA lowered target prices across all Macau gaming stocks. Galaxy Entertainment remains the firm’s preferred sector pick. The brokerage maintained Outperform ratings on Galaxy Entertainment, Sands China and MGM China, downgraded Melco Resorts & Entertainment from Outperform to Hold, and kept Wynn Macau at Hold and SJM Holdings at Underperform.
