Citigroup has raised its forecast for Macau’s fourth-quarter casino gross gaming revenue (GGR) to MOP52.5 billion (US$6.52 billion), from a previous MOP51.0-billion estimate, despite investors’ concerns regarding a weak Chinese economy.
“Making us more optimistic than we already were for four-quarter 2023 is Macau’s unprecedented event calendar,” wrote Citigroup’s analysts George Choi and Ryan Cheung in a Tuesday memo. The institution’s revised GGR estimate for the fourth quarter would imply a “circa 7.4 percent quarter-on-quarter growth,” they added.
“Players are spending more in Macau, despite the current weakness in Chinese economy,” stated the Citigroup analysts.
They added: “Interestingly, the six casino operators are putting together an unprecedented lineup of events for the fourth quarter of 2023 (not only for the National Day Golden Week but also for the rest of the quarter), and this could provide an extra boost to gaming and non-gaming revenues.”
The entertainment events the institution referred to include concerts by Hong Kong singers MC Cheung Tin Fu, Terence Lam and Kelly Chen, as well as a poolside party featuring American basketball star Shaquille O’Neal. These are scheduled to take place during the October Golden Week period at various casino resorts in Macau.
China’s State Council has designated September 29 to October 6 inclusive this year as the holiday period popularly known as either autumn or October Golden Week. This year, the period encompasses the lunar-calendar based Mid-Autumn Festival, falling on September 29, and China’s National Day on October 1.
A number of hotel properties at Macau casino resorts has already sold all or most of the rooms that are available on the open market, for most nights of the upcoming autumn Golden Week holiday period.
The robust advance bookings particularly for the five-star tier, could bode well for casino GGR during the festivities, suggested several industry experts in comments to GGRAsia.
“We expect the normal ‘post Golden Week hangover’ to be much less severe, as Eason Chan (a leading male singer of his generation in Greater China and is in our view the same caliber as Jacky Cheung) will perform nine shows over the three weekends after the National Day Golden Week,” said Citigroup in Tuesday’s memo. Hong Kong singer Eason Chan is to perform at Cotai Arena, part of the Venetian Macao casino resort.
“We expect the highest monthly GGR in October (as high as MOP19.0 billion), driven by the National Day Golden Week,” said Citigroup’s Mr Choi and Mr Cheung.
They expect Macau GGR to average approximately MOP765 million a day during October 1 to 6, going down to a daily average of MOP575 million for the remainder of the month.
“If it materialises, it would imply a moderation in the GGR run-rate by circa 25 percent versus the Golden Week [period], reflecting a less severe ‘post Golden Week hangover’ due to the scheduled concerts and shows,” said the Citigroup team.
Citigroup also raised its GGR forecasts for November and December, to MOP16.0 billion and MOP17.5 billion, respectively. The institution’s estimate for full-year 2023 GGR now stands at MOP181.5 billion, around 62 percent of the 2019-levels, before the onset of the Covid-19 pandemic.
“We also modestly raise our financial year 2024 GGR by around 3 percent to MOP216.0 billion … and our financial year 2025 GGR forecast by around 6 percent to MOP234.0 billion,” said the Citigroup analysts.
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"The six Macau casino operators should not be penalised for upping expenditure on player incentives, so long as their EBITDA margins are not materially diluted”
George Choi and Ryan Cheung
Analysts at Citigroup