Investment bank CLSA has revised down its estimates for Macau’s casino gross gaming revenue (GGR) for 2024 and 2025 due to near-term uncertainty, such as seasonality and China’s intensified crackdown on illicit money exchange.
According to its latest investment memo, CLSA now projects Macau’s casino GGR to reach MOP232.7 billion ($28.6 billion) in 2024, a 27 percent increase year-on-year. For 2025, GGR is expected to grow by 3.9 percent to MOP241.7 billion.
The brokerage lowers its 2024 and 2025 GGR estimates by 3 percent and 5.3 percent, respectively, adjusting visitation and GGR per visitor assumptions based on the Macau casino regulator’s reported 2Q24 GGR of MOP56.4 billion ($7 billion), which is 1.6 percent lower than 1Q24, and the effects of China’s crackdown on illegal money exchange.
The weaker 2Q24 GGR in Macau was largely attributed to a seasonally weak June, coinciding with the UEFA Euro 2024. June’s GGR was just over MOP17.69 billion ($2.2 billion), the lowest monthly figure so far this year. Several investment analysts suggested this figure might represent the ‘floor’ for Macau’s monthly GGR run rate this year.
‘Although a soft start to July’s GGR and recent crackdown on illegal money exchange activity have weighed on investor sentiment, stable balance sheets and sensible competition should enable the companies under our coverage to weather these short-term headwinds,’ the CLSA analysts noted.
In addition to lowering its GGR forecasts for 2024 and 2025, CLSA also reduced its estimates for the Macau gaming sector’s EBITDA for the same years, citing increased promotional activities and rising payroll costs.
CLSA now expects sector adjusted EBITDA to be HKD63.3 billion ($8.1 billion) this year, down 8 percent from its previous estimate. This figure would represent 85 percent of the levels seen in 2019, the last trading year before the onset of COVID.
For 2025, the brokerage has lowered its EBITDA forecast for Macau’s casino sector by 5.8 percent, to around HKD71.7 billion ($9.2 billion).
Sector EBITDA is expected to be fully normalized in the second half of 2025, with Macau’s gaming industry EBITDA reaching 4 percent above the 2019 level.
The CLSA analysts also forecast that, considering the promotional activity and rising payroll costs among Macau casino operators, the sector’s EBITDA margin (measured against net revenue) will contract by 1.2 percentage points to 30.3 percent in 2Q24.
