Macau's January gaming revenue shows robust recovery, exceeding projections

Macau's gross gaming revenue (GGR) for the initial 21 days of January 2024 reached MOP13 billion ($1.6 billion), reflecting an average daily revenue of MOP629 million ($78 million). This marks a 5% increase compared to the previous week, as reported by a recent HSBC Global Research release.

The surge in revenue is attributed to heightened traffic and an enhanced VIP win rate, which rose from approximately 2.7-2.8% to between 2.8-3.0% in the last week, Macau Daily Times reported. The report notes a 1% month-to-month increase in VIP gaming volume, while mass market GGR experienced a 4-5% rise compared to the prior week's 3% increase.

Sands China and MGM are gaining market share in the mass gaming segment compared to December, according to the research group.

If the GGR sustains an average daily run-rate of MOP550-600 million ($68.3-74.5 million) throughout the remainder of January, projections estimate the total GGR for the month to range between MOP18.5 to MOP 19 billion ($2.3 to $2.36 billion). This forecast indicates a recovery to 74-76% of January 2019 levels, showing a slight improvement from the 75% recovery observed in the fourth quarter of 2023.

Earlier, Citigroup forecasted Macau's GGR for January 2024 to potentially reach MOP 17.5 billion (US$2.2 billion), indicating a recovery to 70% of 2019 levels. This expectation follows a December 2023 performance that exceeded initial forecasts, with average daily revenue of around MOP 600 million, surpassing expectations by approximately 6%.

JPMorgan predicted the January GGR to range between MOP17.5 billion to MOP18 billion. Despite macroeconomic challenges, the outlook for Macau's casinos in the Year of the Dragon remains optimistic, according to their report.

In a separate research report, Morgan Stanley expresses continued positivity towards Macau's gaming industry, predicting that gaming companies will outpace China's consumer market in earnings. The brokerage suggests that industry valuations have declined excessively. Key considerations for stock selection this year will center around market share trends and corporate operating leverage levels, the report said.