In a year marked by macroeconomic headwinds, the Macau gaming sector continues to demonstrate resilience. According to an investment memo from JP Morgan, 4Q24 posted the highest gross gaming revenue (GGR) in 20 quarters despite challenging conditions.
Analysts DS Kim, Mufan Chi, and Selina Li note that valuations in the sector remain low, and while the results were in line with estimates, ‘a sector-wide rally seems unlikely’ without a clear catalyst or broader market excitement.
Macau’s GGR in 4Q24 showed a solid 3 percent quarter-on-quarter growth and a 6 percent year-on-year increase, aligning with expectations and seasonal trends. JP Morgan notes that the performance across segments reflected stability, with mass GGR, which includes slot machines, rising by 5 percent quarter-on-quarter. This was an all-time high, sitting 11 percent above pre-COVID levels. In contrast, VIP GGR remained largely flat quarter-on-quarter, still around 20 percent of pre-pandemic numbers.
These results are ‘respectable’, particularly given the ongoing macroeconomic challenges and the impact of President Xi Jinping’s visit to Macau, which caused some disruptions.
Macau operators are scheduled to report 4Q24 results between late January and early March, with expectations for modest industry-wide earnings growth.
JP Morgan notes that industry EBITDA is projected to edge up by 2-3 percent quarter-on-quarter, with margins expected to remain stable. Despite this overall outlook, there will be variations between operators, with the market closely monitoring market share shifts and operational expenditure changes.
Market share shifts
JP Morgan predicts MGM and Galaxy will be the main winners in the market, with share gains expected for both. MGM is projected to gain an additional 90 basis points (bps) quarter-on-quarter, reaching a market share of 15.6 percent, which aligns with its target of a ‘mid-teens’ market share.
Galaxy is expected to gain 80bps, reaching 19.7 percent, a post-reopening high, as it continues to expand its Phase III hotels and revamped gaming areas.
On the other hand, Sands is expected to experience a significant drop in market share, losing nearly 100bps quarter-on-quarter to around 23.5 percent. This decline is attributed to disruptions caused by the Londoner hotel’s room renovation, which resulted in 100 percent of Sheraton rooms being taken offline at the end of last year. This disruption is expected to ease from Chinese New Year (CNY) through May, as renovated suites are gradually rolled out.
SJM is also expected to lose around 30bps, dropping to 13.6 percent, reversing some of its gains from 3Q24 due to normalizing VIP luck and other factors. Wynn and Melco’s market shares are expected to remain stable in 4Q24.
Flat EBITDA momentum
Analysts from JP Morgan indicate that while the industry as a whole is expected to see relatively flat EBITDA momentum, Galaxy is forecast to be the standout performer. The operator’s EBITDA is projected to grow by 8 percent quarter-on-quarter, reaching post-pandemic highs and achieving 80 percent of its pre-COVID-19 EBITDA. This growth could make Galaxy the only meaningful outperformer in 4Q24.
Modest expectations for Chinese New Year
For Chinese New Year (CNY) Golden Week, JP Morgan does not anticipate a major shift in industry trends. While bookings for the holiday are nearly full, with 99 percent of casino hotel rooms sold out for peak days, the firm expects only modest year-on-year GGR growth in the low to mid-single digits.
The brokerage reminds that last year’s solid performance makes for tough year-on-year comparisons, especially from January through May 2025.
As a result, industry GGR is expected to grow by 4 percent year-on-year in 1H25, compared to a stronger 7 percent growth in 2H25. JP Morgan maintains its FY25 GGR growth forecast at 5 percent, with mass and VIP growth rates of 7 percent and 4 percent, respectively.
