Mass Casino Revenue Set to Exceed Pre-Covid Levels Next Year – Morgan Stanley

MACAU, SAR (May 6, 2023) — Macau’s gaming sector is poised for a strong recovery, with mass revenue expected to surpass pre-Covid levels next year, according to a recent report by Morgan Stanley.

Macau News Agency (MNA) reported the investment bank predicted earlier this week that casino revenue from the mass market would reach 90 per cent and 115 per cent of 2019 levels in 2023 and 2024, respectively.

Macau’s monthly gross gaming revenue (GGR) has exceeded consensus expectations for two consecutive months, indicating a strong recovery, said analysts Praveen K Choudhary, Gareth Leung, and Stephen W Grambling.

The analysts’ report attributed the growth to the recent visitation recovery, which reached 64 per cent of pre-Covid levels in April, when gross gaming revenue of MOP14.72 billion (US$1.83 billion) was reported, up nearly 450 per cent on the equivalent period in 2022.

The investment bank estimated April’s mass-market revenue at around 100 per cent of pre-Covid levels.

Morgan Stanley analysts believe that the positive operating and financial leverage in the region has been underappreciated, citing recent figures from two gaming operators.

In the first quarter of 2023, Sands China reported an EBITDA margin of 31.1 per cent, while MGM’s first-quarter EBITDA margin was 26.7 per cent, demonstrating an improvement from 2019 figures.

The investment bank also predicted 2023 mass gross gaming revenue to reach as much as US$19.9 billion – or about 88 per cent of the level recorded in 2019 – and 2024 mass GGR to hit US$25.7 billion – about 114 per cent of the 2019 level.

The bank has also boosted its 2023 and 2024 EBITDA estimates for Sands China by 23 per cent and 4 per cent, respectively, and for MGM China by 23 per cent and 5 per cent, in comparison with 2019 levels.

SOURCE: Macau News Agency (MNA).