Macau Mass Revenue in Q2 to Reach 90 Percent of Pre-Covid Levels –Morgan Stanley

MACAU, SAR (June 27, 2023) — Brokerage firm Morgan Stanley has said that Macau’s gaming industry is set to approach pre-Covid levels in the second quarter of 2023, with mass revenue reaching 90 percent of 2019 levels.

According to the Macau News Agency (MNA) analysts Praveen K Choudhary, Gareth Leung, and Stephen W Grambling predicted in a recent note that industry EBITDA would increase by 46 percent quarter-on-quarter, reaching US$1.6 billion (MOP12.9 billion), equivalent to 70 percent of pre-pandemic levels. Meanwhile, free cash flow to equity is expected to approach 60 percent of 2019 levels.

The investment bank also forecast that Macau’s mass revenue in the second quarter would surge by 29 percent quarter-on-quarter, reaching US$4.8 billion, which is close to 90 percent of pre-Covid levels.

Morgan Stanley further noted that the recent recovery of the gaming industry had been helped by a few major concerts held in the SAR, which the firm expected to continue in the third quarter of the year.

The series of concerts held in the city was also credited for gross gaming revenue setting new record highs since the pandemic.

Morgan Stanley’s latest report highlighted that spending per visitor in Macau is currently tracking 50 percent higher than pre-pandemic levels in 2019. The investment bank believes that the recovery of visitation to the city will provide even more upside potential for gaming revenue.

The recovery could be driven by a rebound in package tours, as well as an increase in visitation from provinces further away from Macau, the analysts explained.

Additionally, the improvement in ferry and air travel capacity is expected to support the recovery of the gaming industry.

The brokerage forecasts mass revenue to reach 115 percent and 125 percent of 2019 levels in 2024 and 2025.

In addition to the increase in revenue, industry valuation could receive a boost from deleveraging efforts, according to analysts at Morgan Stanley. The investment bank estimates that the market value of the industry could increase by 50 percent with the help of deleveraging.

Despite the optimistic outlook, the analysts also caution that there are risks to the industry’s recovery. For instance, visitation recovery may continue to be sluggish, and non-gaming investments could prove to be dilutive or even negative to earnings.

SOURCE: Macau News Agency (MNA).