Analysts at Morgan Stanley maintain their bullish outlook on 2Q23 mass gaming revenue for Macau’s six gaming concessionaires, noting that gaming performance is set to approach pre-COVID levels in 2Q23, with mass revenue reaching 90 percent of 2019 levels.
In a note on Tuesday, analysts Praveen Choudhary, Gareth Leung, and Stephen Grambling predicted that industry EBITDA would increase by 46 percent quarter-on-quarter, reaching $1.6 billion, equivalent to 70 percent of pre-pandemic levels. Meanwhile, free cash flow to equity is expected to approach 60 percent of 2019 levels.
According to official statistical data, Macau’s casino GGR stood at MOP65 billion ($8.06 billion) for the five months to May 31st, an increase of 173 percent from a year earlier. However, the figure is just 52 percent of 2019 levels (MOP 125.7 billion).
The brokerage said it expects the Macau casino EBITDA result in 2Q23 will be boosted by a 29 percent increase in industry-wide mass and slot gross gaming revenue to $4.79 billion, with further gains expected in 2H23.
They pointed out that “a few major concerts helped in 2Q23, which we expect will continue in 3Q23. Visitation in 2Q23 was only at 60 percent of 2019 levels, and more than 5 percent of rooms have been offline, suggesting upside to 3Q-4Q estimates.”
“Spending per visitor is tracking 50 percent above the 2019 level. Further upside to mass revenue could come from a recovery in package tours, visitation from provinces further away from Macau and improving capacity for ferry and air travel. ” analysts noted.
The investment bank also forecasted industry mass revenue to reach 115 percent and 125 percent of 2019 levels in 2024 and 2025.
Furthermore, Morgan Stanley believes Wynn Macau Ltd and Melco Resorts & Entertainment Ltd, “have gained revenue market share” in 2Q23.
“Melco benefited from the opening of the EPIC hotel and indoor water park in April. Wynn benefited from the completion of the renovation of its peninsula casino. We expect mass win rates to have normalized for both as well during the quarter (after weak 1Q mass win rate).”
Regarding MGM China, analysts expect its market share could reach 13 percent in 2024. “This means 2024e mass revenue to be at least 30 percent above 2019 even if we assume no growth in industry mass revenue vs. 2019.”
