In Q1, Macau Gross Gaming Revenue (GGR) experienced a 6 percent quarter-on-quarter growth, reaching MOP57 billion ($7.06 billion), equivalent to 75 percent of pre-COVID-19 levels.
Both the mass and VIP segments saw positive growth, with mass GGR increasing by 4 percent, surpassing pre-pandemic levels by 112 percent. VIP volumes also saw a significant uptick, registering a ~28 percent recovery rate. Notably, within the mass segment, the premium category led the charge, exceeding pre-COVID-19 levels by 125-130 percent, while the grind/base mass segment maintained a steady recovery rate of around 90 percent. This shift towards premium mass has favored operators like Wynn and MGM, as opposed to those catering predominantly to the grind mass market, such as Sands and Galaxy.
Sector EBITDA is forecasted to grow by 4 percent q/q to $2.1 billion, representing approximately 85 percent of pre-COVID-19 levels. However, this growth rate is slightly slower than GGR momentum, leading to a modest pullback in industry EBITDA, mainly attributed to factors such as annual salary hikes, higher promotional and reinvestment efforts at certain operators, and seasonal retail patterns. While these factors may not pose significant concerns, they do indicate that margin rebound may be delayed until the third quarter due to weak second-quarter seasonality.
Market focus is expected to center on mass-market performance and EBITDA shares, analyzing sequential momentum q/q. Winners in this scenario are likely to include SJM, MGM, and Wynn, anticipated to achieve double-digit EBITDA growth driven by gains in the mass market. Conversely, Galaxy, Melco, and Sands are predicted to experience modest drops in EBITDA q/q, with Wynn and MGM considered to have the best chances of outperforming consensus expectations.
Analysts and industry watchers will be keenly observing commentary on the competitive landscape for premium mass, the trajectory of grind/base mass recovery, the scale of non-gaming investments, and the potential for margin recovery moving forward.
In summary, the first quarter has shown positive signs of recovery for Macau’s gaming sector, with both revenue and profit metrics displaying resilience amidst ongoing challenges. However, the road ahead remains nuanced, with careful monitoring required to navigate shifting market dynamics and capitalize on emerging opportunities.
