During the recent Golden Week holiday from May 1st to May 5th, Macau’s gaming operators exceeded revenue predictions, generating approximately MOP$4.55 billion (US$565 million), equivalent to MOP$910 million (US$113 million) per day. This performance, exceeding expectations of no more than MOP$850 million (US$106 million) per day according to JP Morgan analysts, underscores the resilience of Macau’s gaming industry.
Quality of Players vs. Visitation Rates:
Despite somewhat underwhelming total visitation, the quality of players visiting Macau during Golden Week surpassed expectations. JP Morgan analysts attribute this to the notable revenue surge, emphasizing the significance of discerning visitor profiles in understanding Macau’s gaming landscape.
Comparison with Pre-COVID Levels:
Analysts DS Kim, Mufan Shi, and Selina Li highlight that the Golden Week revenue implies mass Gross Gaming Revenue (GGR) reached 120% of pre-COVID levels, with VIP segments at 30%. This data reflects the industry’s remarkable recovery trajectory, albeit with caution against extrapolating this trend for the remainder of May.
Quarterly Earnings Forecast:
Expectations for the first quarter of 2024 reveal a mixed outlook for Macau’s gaming concessionaires. While Wynn Macau Ltd and SJM Resorts SA are anticipated to report double-digit EBITDA growth, Galaxy Entertainment Group may experience a sequential pull-back. This divergence in performance signals a transition from the initial ‘re-opening rally’ phase to a more nuanced earnings landscape driven by market shares, operational expenditure control, and promotional strategies.
Key Drivers of Earnings:
With the industry’s recovery stabilizing, idiosyncratic factors such as market shares and operational expenses are identified as pivotal drivers of earnings. This shift underscores the importance of strategic decision-making and adaptability amidst evolving market dynamics.
Macau’s gaming sector has demonstrated resilience and adaptability during the Golden Week holiday, surpassing revenue expectations despite challenges in visitation rates. The upcoming quarterly reports present an opportunity for investors to navigate the evolving landscape and capitalize on diverging earnings trends within the sector. As Macau continues to navigate the post-pandemic recovery phase, strategic foresight and agility will remain imperative for sustained growth and profitability in the gaming industry.