Investment bank Citigroup said in a new research note that they maintain a bullish stance on Macau’s gaming industry, anticipating Macau industry-wide EBITDA in 2Q23 to recover to 65 percent of the same period in 2019.
The analysts believe the steady recovery was mainly driven by a 90 percent recovery in mass gross gaming revenue (GGR). “More importantly, visitors to Macau are still demonstrating some higher-than-pre-COVID spending power, a similar trend that can be found in some global luxury consumption discretionary plays,” they note.
According to analysts George Choi and Ryan Cheung, a number of high-profile concerts (e.g. Blackpink, Leon Lai and Jacky Cheung) and the increase in available hotel rooms (after the six operators hired enough non-gaming staff and finished training them) “fueled the continued recovery in visitation”.
The investment bank pointed out that the overall visitation number has recovered 65 percent compared to 2019 levels, and higher value-creating hotel guests recovered to 95 percent of pre-COVID levels.
According to the city’s gaming regulator, Macau’s 2Q23 GGR stood at MOP45.49 billion ($5.63 billion), up 31.3 percent from the MOP34.64 billion ($4.3 billion) registered in the first three months of 2023. In this context, analysts estimate that Macau’s industry EBITDA in 2Q23 has improved to $1.5 billion, up 35 percent quarterly.
The research team also indicated that MGM China is expected to be the first casino operator in Macau to exceed its pro-COVID EBITDA.Concretely, Citigroup anticipates that MGM may register a 7 percent increase in EBITDA this year compared to 2019.
SJM is likely to face some difficulties on the recovery path. Analysts anticipate it to fall behind the pack in terms of EBITDA recovery. “Although we believe Grand Lisboa Palace has gained market share, we also believe that its satellite casinos and other sell-operating casinos are facing market share pressure,” they note.
Citigroup showed more confidence in Galaxy, as Galaxy Macau Phase 3 opened its initial stage in 2023, starting with the GICC (the convention center) and Galaxy Arena in April. Raffles is scheduled for a soft opening in August and analysts believe the other hotel, Andaz “will be rolled out within the next several months. Given the group’s strong execution track record, Galaxy is expected to gain market share in 2023-24E, and earnings growth re-acceleration should follow,” they note.
The research also highlighted Sands China, noting that – with Londoner and Plaza being viewed by the returning players as new properties – “Sands China is enjoying the early benefits from reopening much more than some of its peers.”
“Sands’ hotel offerings have significantly improved after the opening of Grand Suites at Four Seasons, The Londoner Court, and the Londoner Macao Hotel. The much-improved product offerings help Sands gamer market share in the Premium Mass segment,” they note.
