Galaxy Entertainment Group (GEG) is poised to reclaim lost market share in Macau’s competitive gaming landscape over the next 12 to 18 months. Analysts from CLSA foresee this resurgence driven by strategic adjustments within GEG, alongside developments like the refurbishment of Galaxy Macau’s gaming floor. Despite recent setbacks, including consecutive quarters of declining gross gaming revenue (GGR) market share, GEG’s trajectory is set to improve, bolstered by broader market dynamics and policy shifts favoring Macau’s gaming sector.
Market Share Projections
GEG’s market share dipped to 17.4% in the first quarter of 2024 from 18.4% in the previous September quarter. CLSA analysts Jeffrey Kiang and Leo Pan anticipate a gradual recovery, forecasting GEG’s market share to climb back to 18.2% by the end of 2024 and potentially reaching 18.8% by early 2026. This rebound is supported by ongoing renovations at competitors like Sands China’s The Londoner Macao and the stabilization of MGM China’s market share following significant gains in recent reporting periods.
Macau’s Overall Growth Prospects
CLSA has revised upwards its GGR and EBITDA forecasts for Macau, driven by policy amendments from mainland China that are expected to boost visitor numbers. They project Macau’s GGR to increase to US$29.8 billion in 2024 and US$31.7 billion in 2025, with EBITDA reaching US$9.7 billion by 2025. The analysts attribute this positive outlook to supportive policies related to Individual Visitation Scheme (IVS) visas, aimed at enhancing visitation from mainland China.
Demand Dynamics and Visitor Trends
Despite challenges, Macau remains a premier destination for Chinese gamers due to its geographical proximity and allure. CLSA’s overview underscores sustained demand from premium players, with incremental GGR growth likely driven by the grind and base mass segments. The expansion of IVS cities is expected to capture an additional 45 million potential visitors, representing a 14% increase over 2019 visitation levels, further bolstering Macau’s appeal.
Competitive Landscape and Promotional Activities
Intense competition characterizes Macau’s gaming sector, marked by aggressive promotional activities. CLSA notes a 10% quarter-on-quarter increase in aggregate rebates and reinvestments, outpacing corresponding GGR growth from late 2023 to early 2024. Despite these pressures, such investments are deemed essential for driving business growth in the sector, reflecting 18.0% of the sector’s GGR in the first quarter of 2024.
While challenges persist, particularly in a highly competitive environment with escalating promotional activities, Galaxy Entertainment Group is poised for a resurgence in Macau’s gaming market. Strategic initiatives and market dynamics, including supportive policy changes and ongoing renovations at key competitors, position GEG favorably for market share recovery. With a positive outlook for Macau’s overall GGR and EBITDA, driven by sustained demand and policy enhancements, the stage is set for GEG to capitalize on opportunities in the evolving gaming landscape.