Macau’s casino gross gaming revenue (GGR) in the fourth quarter may see a 4 percent sequential increase and a year-on-year improvement of 5 percent, amid factors including strengthening of China’s currency the yuan, relative to the Hong Kong dollar, the currency used for most casino bets on Macau. That is according to a research note from China International Capital Corporation Hong Kong Securities Ltd (CICC).
The final three months of 2024 were also in likelihood boosted by a “strong” October Golden Week, a seven-day holiday in the Chinese mainland, and a peak period for Macau casino business.
CICC analysts Shengyong Goh, Jiayu Wang and Liwei Hou wrote in the Saturday memo: “After the Chinese government introduced incremental fiscal policy measures to support the economy in October, we saw an uptick in consumer confidence and increased gaming demand.”
They added: “We think the outperformance in the first two weeks of October could indicate resilient demand and the return of premium patrons heading into the rest of the year.”
The brokerage observed also that following the yuan’s appreciation against the Hong Kong dollar, mainland consumer travel demand that previously spilled out to neighbouring countries may return to the Hong Kong SAR and the Macau SAR.
“Meanwhile, the purchasing power of Chinese patrons in the Macau SAR could also expand and translate into sequential growth in gaming volumes on the tables,” the CICC analysts wrote.
The city saw a record monthly tally of visitors in August, though average daily revenue (ADR) for gaming stood at MOP637 million (US$79.6 million), below a May high of MOP651 million.
August had an “underwhelming” GGR performance, said the brokerage, possibly due to “weaker-than-expected consumer confidence”, and the factor of “grind mass patrons with lower spending power” returning to the Macau market at the time.
But things got better by October, in time for that month’s Golden Week, marking China’s festivities around National Day.
Average daily revenue for October 1 to October 6 reached MOP1.08 billion, up 30 percent year-on-year and also up 19 percent versus the Labour Day holiday in early May this year, said the CICC team.
In the second week in October, the city’s average daily revenue reached MOP643 million, up 27 percent year-on-year and an 86-percent recovery versus the same period in 2019.
Events boost
Certain non-gaming events hosted so far this year may have also played a role in stimulating the city’s visitor traffic and GGR, the analysts said.
“We believe future margins of Macau’s six main operators could become more dependent on such [non-gaming] events. Thus, gaming operators are increasing the frequency of hosting non-gaming events (e.g., concerts, residency shows, sports events, and art exhibitions),” the CICC team wrote.
“Looking into the fourth quarter, we expect concerts by Andy Lau and Dao Lang, as well as UFC Fight Night, to be the most appealing events for hardcore gaming patrons. We think such events could drive GGR at the operators accordingly and bring improvements to margins,” the analysts added.
The expected fourth-quarter Macau GGR catalysts of a stronger Chinese yuan, better Chinese consumer confidence and more events hosted by the casinos, however, might be offset by “traffic restrictions during ceremonies related to Macao SAR Establishment Day”, the analysts suggested.
In its latest forecast, CICC estimated Macau’s casino GGR to reach US$28.17 billion in 2024 and US$30.30 billion in 2025, respective improvements year-on-year, of 24 percent and 8 percent. If the numbers were realised, the 2024 casino GGR would have recovered to 78 percent of 2019-level, with an 84-percent recovery in the subsequent year.
The CICC team also estimated Macau’s industry adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) for 2024 to reach nearly US$8.12 billion, and in 2025 nearly US$9.15 billion. Both numbers, if realised, would represent an 86-percent and 97-percent recovery compared to 2019.
