Macau’s daily casino gross gaming revenue (GGR) could be circa 17 percent higher during China’s Golden Week holiday straddling the end of September and start of October, than is expected for the rest of October, says Morgan Stanley Asia Ltd.
The brokerage forecasts approximately MOP750 million (US$93.1 million) in daily GGR during the holiday season, versus MOP640 million for the non-holiday portion of October.
Parts of September had been “impacted by typhoons and weak seasonality, but the second half of September has recovered well so far, and October [hotel] bookings are strong,” observed analysts Praveen Choudhary and Gareth Leung in a Monday memo.
They added: “We expect fourth-quarter 2023 EBITDA [earnings before interest, taxation, depreciation and amortisation] to grow more than 10 percent quarter-on-quarter, helped by better industry revenue recovery and operating leverage.”
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.
Morgan Stanley recently lowered by 5 percent, on average, its estimates on 2023 EBITDA for Macau’s six casino operators, against the backdrop of choppy market recovery.
The institution now expects Macau’s gaming industry EBITDA to reach nearly US$6.55 billion this year, versus a previous estimate of US$6.90 billion.
The brokerage’s Monday update, commenting on its recent visit to Macau, observed: “Our junket channel checks indicate the visit frequency of high-end customers increased versus pre-Covid, but spending per head decreased 20 percent to 30 percent.”
Morgan Stanley added: “Customers with businesses/wealth in China property are currently minimal.”
A positive, however, was that from its enquiries, “visa issuance to Macau seems to have become easier”. That was understood to be a reference to exit visas required by residents of mainland China, in order to visit Macau.
Macau’s tourism authority has increased by more than 10 percent its daily visitor arrival forecast for autumn Golden Week. The body now expects the city to welcome a daily average of “over 100,000” visitor arrivals during the period.
Macau recorded just over 3.22 million visitor arrivals in August, up 16.7 percent month-on-month, showed data published on Tuesday by the city’s Statistics and Census Bureau.
The number of visitors from the mainland was just above 2.32 million, accounting for 72.0 percent of August’s total arrivals.
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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