Global brokerage CLSA has raised by 3.5% its 2024 gross gaming revenue forecast for Macau, which it now estimates will come in at US$30.3 billion due to higher visitation trends in traditionally slower months.
The updated projection would see Macau’s GGR growing by 34% year-on-year from US$22.8 billion in 2023, with the brokerage predicting further 5% growth to US$31.9 billion in 2025.
However, CLSA has at the same time lowered its industry-wide EBITDA forecast by between 1% and 3% as a result of the competitive market landscape and disruptions at Sands China’s The Londoner Macao as part of its Phase 2 revamp.
In a research note, analysts Jeffrey Kiang and Leo Pan said the normalization of visitation to Macau is ongoing, despite general macro headwinds, with mass gaming demand continuing to thrive. This, they said, allowed 1Q24 GGR of MOP$57.3 billion (US$7.1 billion) to remain in line with sector estimates despite low VIP win rates in February which impacted the month’s revenue result.
“We continue to attribute such resilience to Macau’s niche positioning, targeting less than 2% of China’s population,” they wrote.
Yet profits are likely to take a hit throughout the year with most concessionaires investing heavily amid intense competition from their peers.
“Galaxy, Melco and SJM are introducing smart chips in 2024 to better target premium players for promotions and improve table turnover,” CLSA said, while Galaxy has also indicated it is revamping its sales force in light of its soft market share in 4Q23.
“Similarly, Melco emphasised the need for higher efficiency on its promotional spending,” the analysts added.
“Company-wise, we also factor in the revamp of Londoner Phase 2, for which we expect meaningful disruptions of incumbent operations to kick in from 2Q24 to 4Q24. This would weigh on Sands China’s GGR market share in 2024, with other concessionaires likely gaining market share.”
Sands China will, however, reap the rewards of this Londoner revamp from 2025 onwards, they said.
