CLSA Updates Macau GGR Forecast: Up 34% In 2024, EBITDA Cuts 1.2%

CLSA revised its financial forecasts for Macau’s gaming sector for 2024 and 2025. This adjustment reflects ongoing changes in the global and regional economic landscape, competitive pressures among Macau casino operators, and evolving regulatory frameworks. The company specifically adjusted its expectations for gross gaming revenue (GGR) and earnings before interest, tax, depreciation and amortization (EBITDA) to align with this new reality.

Detailed earnings adjustment:

The brokerage now forecasts Macau’s GGR to reach $30.3 billion in 2024, up 34% year-on-year. Further growth of 5% is expected in 2025, totaling $31.9 billion. These forecasts are significantly higher than previous estimates and 8% and 5% higher than previous consensus estimates. The adjustments were made in part as tourist numbers recovered quickly and the economic environment stabilized.

CLSA cut its EBITDA estimate for Macau casinos by 1.2% in 2024 to HK$68.63 billion (roughly Rs. 8.76 billion). The cut reflects a relentless competitive landscape that continues to impact market dynamics among the six major casino operators. Analysts note that despite these challenges, EBITDA leverage ratios among operators have improved and recovered, but are indicating market conditions that have not yet normalized.

Market dynamics and competitive environments:

Competition among casino operators in Macau has led to an increase in rebate and reinvestment efforts to attract and retain premium mass players. In 2023, rebates and reinvestment accounted for about 17-18% of the total GGR, a significant increase compared to 22% in the pre-pandemic period. The changes show a strategic adjustment by casinos to focus more on mass market players, which are increasingly seen as stable revenue streams compared to the high roller sector that dominated before the pandemic.

CLSA remains optimistic about the long-term prospects for the Macau gaming industry, despite a downward revision in its short-term forecasts. The improvement of China’s regulatory environment and a gradual return of international tourism are expected to strengthen the sector’s performance. Analysts predict the market will recover significantly by 2025, reaching 89% of its pre-pandemic GGR level.

CLSA’s update offers a nuanced perspective on Macau’s gaming industry, reflecting both challenges and market resilience. As the industry navigates the complexities of economic recovery, regulatory changes and competitive pressures, these revised forecasts provide stakeholders with important insights into the future of Macau’s casino industry.

As the global economic situation stabilizes and Macau continues to adjust its strategy for the New Normal, the sector is likely to gradually return to pre-pandemic prosperity. Stakeholders should leverage these insights to refine their strategy, remain vigilant, and adaptable to the evolving market conditions and opportunities. 파워볼사이트