According to a mid-month update, the investment bank JP Morgan confirms that Macau’s gross gaming revenue (GGR) had a solid performance, beating seasonality.
Macau’s GGR for the first 14 days of January is estimated at MOP8.6 billion ($1.1 billion), translating to a robust run-rate of MOP614 million (76.1 million) per day, compared to MOP599 million ($74.2 million) per day in December, which was already beat.
Analysts from JP Morgan note that the solid momentum has continued from December to January, as the figure implies last week’s daily GGR was MOP600 million ($74.4 million), which was obviously lower than the impressive New Year holiday print of MOP630 million ($78.1 million) but still pretty solid.
According to the investment memo, the number indicates mass GGR was running at 105-110 percent of pre-COVID levels versus 105 percent in 4Q23, while VIP was around flattish month-over-month at around 20 percent.
While GGR is due to slow down seasonally for the balance of the month ahead of the Chinese New Year, the Chinese New Year Golden Week is February 10th to 17th in 2024. The broker expects January to print MOP17.5-18 billion, which should still satisfy market expectations.
4Q earnings preview
Macau casinos will start reporting 4Q earnings in late January. JP Morgan expects industry EBITDA to grow 8-9 percent quarter-to-quarter to hit 85 percent of pre-COVID levels on a luck-adjusted basis versus an 80 percent recovery in 3Q.
‘Investors will likely scrutinize OPEX and promotions/reinvestments given (modest) margin disappointments from 3Q, and we believe most operators will be okay here, perhaps, except the one with additional capacity (Galaxy with a full-quarter impact from Phase III).’
The fourth quarter is seasonally strong. Macau generated a total GGR of MOP54,111 million ($6.72 billion), up 11 percent quarter-to-quarter. Macau had a solid performance in December, with GGR recovering to MOP600 million ($74.5 million) per day, thanks to the continued recovery in visitation.
Strong hotel bookings over Chinese New Year break
The strong forward hotel room bookings for the Chinese New Year (CNY) holidays are reflected in hotel rates.
In another investment memo, UBS notes that out of the 36 hotels tracked by the research team, the 7-day forward average room rate increased week-over-week to HK$2,500 ($320) per night, compared to HK$2,100 ($268) per night in the previous week.
‘The average hotel price for the upcoming CNY period remains solid at HK$8,900 ($1,138) per night, consistent with the price trend of October Golden Week 2023.’
Galaxy Entertainment‘s management stated last week that most of the bookings are already filled by players, with limited inventory left for retail.
