Macau’s gaming operators have reported a combined gross gaming revenue of MOP$12.5 billion in the first 21 days of April. According to JP Morgan’s estimates, the daily run-rate of MOP$595 million represents a slight decline of 5% compared to March. However, this dip aligns with expected seasonal patterns. Recent figures suggest a stabilization in revenue streams, with a daily run-rate hitting MOP$600 million over the past week.
Stability Amid Seasonal Shifts
JP Morgan analysts DS Kim, Mufan Shi, and Selina Li have noted that the observed decline in gaming revenues is in line with seasonal norms. They indicate that the recent run-rate of MOP$600 million per day signals a resurgence in stability. Notably, mass gaming gross revenues remain robust at approximately 110% of pre-COVID levels. VIP gaming has also shown signs of recovery, hovering around the mid-20% mark.
Anticipating Divergence in Market Performances
Looking ahead, Kim, Shi, and Li predict a market divergence as Macau’s gaming concessionaires unveil their first-quarter 2024 financial results. Last week, Sands China started the earnings season with disappointing figures. However, JP Morgan anticipates strong double-digit EBITDA growth from key players such as MGM, Wynn, and SJM. Conversely, declines are expected for Sands, Galaxy, and Melco.
The analysts underscore that the industry’s stabilization at current levels will shift focus towards unique factors like market shares, operational expenditure control, and promotional strategies as primary drivers of earnings for each operator.
Earnings Revision Trends
As 1Q results emerge, JP Morgan foresees distinct earnings revision trends among operators, presenting potential alpha opportunities within the sector. This shift highlights a move away from industry recovery metrics towards nuanced operational strategies as key value propositions.
The narrative surrounding Macau’s gaming industry reflects a complex interplay of seasonal influences, recovery trajectories, and strategic business approaches among key players. The forthcoming earnings season is poised to unveil distinct performances, setting the stage for strategic investment considerations within the sector.