S&P Global Ratings expects Macau’s mass-market gross gaming revenue (GGR) this year to be “15 percent to 20 percent above” the pre-pandemic level of 2019. “However, junket – or VIP – volume will likely stay near current low levels,” stated the institution in a Monday report.
The rating agency expects Macau GGR in 2025 “to be 5 percent to 6 percent stronger year-on-year”. “Total GGR … will likely be 80 percent to 85 percent of 2019 level,” wrote Flora Chang and Melissa Long.
In 2019, Macau’s mass-market segment – including slot machines – generated revenue of MOP157.2 billion (US$19.6 billion), accounting for 53.8 percent of aggregate revenue for the year, according to official data.
In Monday’s memo, S&P Global said it based its total GGR growth forecast in 2025 “mainly on strong momentum in the mass-market segment”.
“Mass-market GGR will grow in 2025 as visitation to Macau returns to pre-pandemic levels, aided by solid demand from premium mass customers, return of base mass, and expanded hotel capacity,” it added.
But it warned: “Economic headwinds and potentially higher operating expenses aimed at attracting more premium-mass players could impair Macau cash flow and leverage improvement.”
There are six gaming concessionaires in the Macau market, with all of them having started new 10-year public concessions in January 2023. S&P Global issues ratings covering four of the city’s casino operators: Sands China Ltd; Wynn Macau Ltd; MGM China Holdings Ltd; and Melco Resorts (Macau) Ltd, the concession-holding entity of Melco Resorts & Entertainment Ltd.
The institution said it expected Melco Resorts (Macau) and Sands China to post faster growth in terms of earnings before interest, taxation, depreciation and amortisation (EBITDA), “due to the ramp-up of new or renovated properties”.
S&P Global observed that MGM China had already surpassed its pre-pandemic EBITDA. “We estimate other Macau operators will recover to about 90 percent of their 2019 EBITDA levels by 2025,” it added.
Sands China and the Melco group were likely to see gains in mass-market share in 2025, suggested S&P Global.
“The ramp-up of Studio City Phase 2 should help Melco to capture mass volume in Macau. Also, Sands should benefit from reopening of [revamped facilities at] The Londoner [Macao] and the return of base mass with its largest hotel portfolio in Macau,” it stated.
The institution added: “While we expect MGM [China] to maintain higher mass market share, constraints in hotel room capacity, competition from new properties, and recovery among other operators could cause its share to dip from its current high levels.”
Wynn Macau Ltd “could lose some share in 2025 with the absence of new capacity,” it noted.
The rating agency said the Macau operators it covers “have sufficient liquidity” to address 2025 and 2026 maturities, and to “sustain their healthy liquidity positions”.
“Operators could continue to pay down some maturities to lower leverage and improve capital structure, supported by EBITDA and free operating cash-flow growth,” stated S&P Global.
