Morgan Stanley forecasts that Macau’s mass market gross gaming revenue will surpass 120 percent of pre-pandemic levels by the end of 2024, potentially leading to EBITDA figures reaching (or slightly exceeding) 2019 levels.
Diverging from the market sentiment, which anticipates a slowdown or decline in revenues for Macau following China consumer trends, Morgan Stanley expressed bullish sentiments on the SAR’s gaming industry mass GGR growth.
Contrary to the market’s belief that mass GGR will stabilize or experience marginal growth, the brokerage cites three key reasons for their confidence.
These include that ‘mass GGR already achieved 105-110 percent of the 2019 level during the 2023 October Golden Week holidays China discretionary sales,’ notes the brokerage. Meanwhile, ‘Las Vegas, and Singapore GGR have exceeded 30 percent above the 2019 levels; and Macau has added 16 percent to its hotel room supply compared to 2019,’ note the analysts.
‘We believe this was driven by strong premium mass business, which was driven by a smaller group of ultra-high-end consumers in China. Companies and our junket contacts in Macau noted resilient/stronger than pre-Covid spend per head for high-end gamblers. Some even noted higher visit frequency to Macau, despite China’s macro slowdown,’ the brokerage added.
Meanwhile, the number of ultra-high-end rooms was said to have increased by half to 1,900 during Covid, which should allow Macau to cater to more overnight visitors and high-end gamblers, resulting in higher mass revenue compared to the pre-Covid levels.
Winners in market share
The positive outlook extends to specific gaming operators, with higher confidence in MGM China and Wynn Macau gaining mass market share in 2024.
The analysis suggests that MGM China’s market share may prove more resilient, benefiting from its Cotai property ramp-up, while Wynn Macau could benefit from enhanced premium product offerings.
‘We expect 2024 mass GGR market share for MGM China, and Wynn Macau to be 13.9 percent and 12.6 percent respectively,’ Morgan Stanley pointed out.
However, Galaxy and Melco should also up their mass market share in 2024, thanks to their new capacity added throughout 2023, via Andaz and Raffles for Galaxy, W Hotel and Epic for Melco’s Studio City.
‘We expect the mass GGR market share in 2024 of Galaxy and Melco to increase to 19.3 percent and 13.6 percent, from 18.2 percent and 13.4 percent in 2023, respectively,’ the dispatch adds.
The assessment concluded that ‘MGM China and Wynn Macau are poised for stronger performance, while Galaxy and Melco may take longer to ramp up their new capacity.’
