Macau's Golden Week gaming revenue surpasses predictions, according to JP Morgan

As per global financial services firm JP Morgan’s estimates, gaming operators in Macau may have garnered gross gaming revenues worth approximately MOP$4.55 billion ($565 million) during the five-day Golden Week holiday from May 1 to May 5.

Operators made approximately MOP$910 million ($113 million) on average per day, which has surprised analysts, exceeding earlier predictions of no more than MOP$850 million ($106 million) per day.

In a note released on Monday, the investment bank attributed the stronger-than-expected performance to the "quality" of players visiting Macau, despite somewhat underwhelming total visitation numbers. If accurate, the estimate represents a 5% to 10% increase above expectations and is 5% faster than recent recovery trends.

Analysts DS Kim, Mufan Shi, and Selina Li noted that the robust figures imply mass gross gaming revenue reaching 120% of pre-COVID levels, with VIP revenue returning to 30%. However, they caution against extrapolating Golden Week data for the remainder of May.

“This divergence here happens as the industry’s recovery stabilizes after a year of a ‘re-opening rally’, in turn making idiosyncratic factors (market shares, opex control, promotions) the key earnings driver, in our view. We expect diverging earnings revision trends into and post-1Q results, which should create alpha opportunity within the sector,” the note said.

The analysts predicted double-digit EBITDA growth for Macau concessionaires Wynn Macau and SJM Resorts in their upcoming first-quarter 2024 results. However, Galaxy Entertainment Group is expected to report a sequential pullback in EBITDA.