No major surprises are expected out of the upcoming second-quarter results for Macau gaming operators, according to Seaport Research Partners, however market share is expected to continue to shift as competitive positions realign.
In a Monday note, Senior Analyst Vitaly Umansky noted that ‘The key questions for the Macau industry will be around operating costs, player reinvestment, July trends and August outlook […] impact of money flow crackdown and the impact it may be having on gaming revenues, slowness of base mass recovery and what expectations may be’.
The analyst notes that July started off ‘quite weak but has picked up’, and that overall the third quarter gross gaming revenue should ‘have a slight increase from Q2 on seasonality’.
Third quarter GGR is now expected to reach over 80.5 percent of the same quarter in 2019.
Looking forward to the fourth quarter, Umansky estimates a 5.5 percent sequential increase, with GGR reaching 83.3 percent of the same quarter in 2019.
For full-year results, GGR is predicted to rise by 26 percent yearly in 2024 and 10 percent in 2025.
Operators
Overall, the group notes that its top pics for the next three to six months are Melco, Wynn and Galaxy, while going into 2025, the analysts prefer Sands China and Las Vegas Sands.
Despite having taken advantage of its increased table numbers and its smart tables, MGM China is predicted to ‘lose share’ starting already in the second quarter, also as other operators incorporate smart table technology.
Estimates are for MGM’s market share to drop to ‘mid 15s percent by the end of this year and into the high 14 percent range in 2025’.
Another market share lower has been Wynn Macau, despite a slight recovery in the first quarter to ‘over 14 percent’. Umansky estimates this will ‘stabilize in the mid 13 percent range this year’.
This is in part due to the loss of the VIP business and its shift towards more premium mass. The analyst notes that ‘Wynn has no new product offering and low capacity to attract base mass and other operators increase competitiveness around premium mass which lead to continued headwind for Wynn in its ability to gain share’.
For Galaxy, which also lost market share in the first quarter due to the decline in VIP, ‘where it was the largest operator’, and softness in base mass (also where it lead due to scale), the group gained ‘significant share in Q2 and we expect share to continue to rise during 2024 and into 2025.
Market share is estimated to ‘rise over 19 percent in 2025’ due to a recovery in base mass.
Looking at Sands China, Umansky is estimating that its GGR market share will also rise to ‘over 25 percent in 2025’, from 24.2 percent in the first quarter of this year. This is aided by a predicted strong contribution from the Londoner and an increase in base mass – which it’s benefitted by its scale.
Looking to Melco, the forecast is for some market share gain in the second half of the year, ‘stabilizing in the high 14s percent range in 2025’. The group is now focused on ‘rekindling its premium mass strength in City of Dreams and ramping up Studio City driven by the new Phase 2 product offering’.
At the back of the pack is legacy Macau gaming operator SJM. Currently expectations are for continued market share gains this year, rising from 12.5 percent in the first quarter to 12.9 percent by 4Q24. But the analyst notes that ‘SJM is likely to lose share in 2025 due to the mid 12s percent range’.
‘The company has become the smallest operator in terms of revenue and remains the smallest operator in terms of EBITDA. The key focus on SJM is for it to hastily improve the ramp up of its new Cotai property – Grand Lisboa Palace. However, we do not forecast a rapid turnaround story for SJM,’ indicates Umansky.
