Macau’s gaming industry has demonstrated robust momentum in the first two weeks of January, maintaining a daily gross gaming revenue (GGR) estimated at MOP$614 million (US$76.2 million). This performance, while slightly below the New Year holiday peak, remains solid and resilient against seasonal factors.
Current Landscape:
According to JP Morgan’s recent channel checks, the last seven days have witnessed a daily run rate of approximately MOP$600 million (US$74.5 million). Although a slight dip from the New Year holiday, it is deemed respectable and indicative of the industry’s resilience.
Segment Performance:
Mass GGR remains a key driver, consistently operating at 105% to 110% of pre-pandemic levels. In contrast, VIP revenue has remained flat at 20%. Analysts DS Kim, Mufan Shi, and Selina Li emphasize the industry’s adaptability to the ongoing challenges.
Projections and Expectations:
Anticipating a slowdown leading up to the Chinese New Year, the analysts project January’s GGR to range between MOP$17.5 billion and MOP$18 billion (US$2.17 billion and US$2.23 billion). Despite the expected deceleration, the industry is poised for a resilient start to the year.
Quarterly Outlook:
With the 4Q23 earnings season looming, industry-wide EBITDA is forecasted to grow by 8% to 9% quarter-on-quarter. This growth is expected to reach 85% of pre-COVID levels on a luck-adjusted basis. Analysts highlight the significance of scrutinizing operating expenses and promotional strategies, particularly after modest margin disappointments in 3Q.
Evaluating Operator Resilience:
Investors are likely to closely examine operating expenditures and reinvestment strategies, given previous margin concerns in 3Q. However, analysts express confidence in the industry’s ability to weather challenges, emphasizing that most operators are well-positioned in these aspects.
Macau’s gaming sector has navigated the initial weeks of January with commendable resilience. Despite the anticipated slowdown in GGR leading up to the Chinese New Year, the industry’s performance remains strong, bolstered by the consistent performance of mass GGR. As the 4Q23 earnings season approaches, analysts maintain a positive outlook, expecting growth and emphasizing the industry’s adaptability in the face of economic uncertainties.