Macau concessionaire Galaxy Entertainment Group should reclaim some of its lost market share over the next 12 to 18 months, aided by a shake-up in its salesforce and a recent reconfiguration of the gaming floor at Galaxy Macau, according to investment group CLSA.
The expected improvement follows two consecutive quarters of GGR market share declines which saw GEG hit 17.4% share in 1Q24, down from 18.4% in the September 2023 quarter. According to CLSA analysts Jeffrey Kiang and Leo Pan, share should steadily recover to 18.2% by the end of this year and as high as 18.8% by early 2026, aided in part by ongoing renovations at rival Sands China’s The Londoner Macao and a stabilization of share for MGM China, which has enjoyed significant gains in recent quarters.
CLSA has also raised its GGR and EBITDA forecasts for Macau as a whole, pointing to supportive policy amendments by the mainland in regard to IVS visas which it says should aid visitation growth. As such, the investment group has raised its GGR forecast by almost 3% to US$29.8 billion in 2024 and US$31.7 billion in 2025, and its EBITDA forecast by 2% to reach US$9.7 billion in 2025.
“May’s strong gross gaming revenue reaffirmed that demand for gaming in Macau remains intact, though the overall level remains 22% below the May 2019 level,” the analysts said. “Our recent channel checks in Macau also confirm … Macau remains the most alluring gaming destination for Chinese given its close proximity to China in every aspect.
“In particular, premium players are still showing up in Macau. Incremental GGR growth will likely be led by grind and base mass segments. We continue to believe policies are in an easing direction, especially following the expansion of eligible Individual Visitation Scheme (IVS) cities, which will catch an additional aggregate population size of 45 million. This is 14% above visitations in Macau in 2019 of 39.4 million.
“Ongoing strong demand in the premium segment and policy support for visitations bode well for Macau’s GGR, in our view.”
The strong outlook comes despite CLSA predicting that highly competitive promotional activity will continue, with aggregate rebates and reinvestments in players having increased by 10% quarter-on-quarter in 1Q24 to US$1.27 billion – faster than the corresponding GGR growth of 6% from 4Q23 to 1Q24.
“As such, the rebates represented 18.0% of the sector’s GGR in 1Q24 (17.3% in 4Q23),” CLSA said. “We continue to expect intense rivalry ahead as such investments are essential to drive business (GGR), in our view.”
