Macau’s GGR gross gaming revenue forecast updated by CLSA: 34% growth in 2024, 1.2% decline in EBITDA

The CLSA financial forecast for 2024 and 2025 has been revised for the Macau gaming sector. The adjustment reflects the current changes in the global and regional economic zone plan, the evolving regulatory environment. It also takes into account competitive pressures among casino operators.

The company has adjusted expectations for gross gaming revenue (GGR) and earnings before interest, taxes. This includes amortization (EBITDA) to bring the numbers in line with current realities.

The Revenue Adjustment Is In Detail

Macau’s GGR will grow 34% year-on-year in 2024, the broker says. Gross gaming revenue will grow to reach US$30.3 billion.

Further growth of 5% is expected in 2025, to US$31.9 billion. 

These forecasts are well above previous expectations and above previous consensus estimates. With a faster recovery in tourist numbers and stabilizing economic conditions, this adjustment has been made.

CLSA lowered its 2024 EBITDA forecast by 1.2% for Macau casinos to HK$68.63 billion (about US$8.76 billion). 

The fierce competitive environment among the top six casino operators affecting market dynamics was reflected in this indicator. Analysts note that despite these challenges, there has been an improvement in the net debt to EBITDA ratio among operators, indicating a recovery.

Competitive Environment And Market Dynamics

Competing casino operators in Macau have led the situation to increase rebates and reinvestments to retain premium players.

The rebates and reinvestments were at 17 to 18% of total GGR in 2023(compared to 22% in the pre-pandemic period). This communicates the casino’s desire to adjust to a greater focus on mass market players rather than the high rollers that dominated before the pandemic.

Although short-term forecasts have been revised downward, CLSA remains optimistic about the long-term prospects for Macau’s gaming industry. 

Expected improvements in China’s regulatory environment and the gradual return of international tourism should boost the sector’s performance. 

Analysts are optimistic that the market will recover to reach 89% of pre-pandemic GGR levels by 2025.

The CLSA forecasts presented represent the various nuances of Macau’s gaming sector. With the challenges of economic recovery, legislation and competitive pressures overcome, the analysts provide valuable insights for the future of the sector.

The sector is likely to gradually return to its pre-pandemic prosperity. Stakeholders are advised to monitor CLSA’s GGR and EBITDA forecasts to have up-to-date and useful information.