Macau gaming revenue hits record high in October

Macau Oct mass GGR likely 113pct of pre-Covid: analysts

Nov 01, 2024 Newsdesk 
www.ggrasia.com/macau-oct-mass-ggr-likely-113pct-of-pre-covid-analysts/

Macau in likelihood had in October an “all-time high” in monthly mass-market gross gaming revenue (GGR), including slots, against the backdrop of “impressive” demand during October Golden Week, says JP Morgan Securities (Asia Pacific) Ltd.

The brokerage was referring to a Chinese mainland holiday running from October 1 to October 7 this year, and encompassing China’s National Day at the start of the break.

On Friday, Macau’s gaming regulator said October aggregate GGR was nearly MOP20.79 billion (US$2.60 billion), up 6.6 percent from a year earlier.

“October printed the highest GGR in 57 months,” wrote JP Morgan analysts DS Kim, Mufan Shi, and Selina Li, in a Friday memo.

They added: “GGR grew 7 percent year-on-year and 20 percent month-on-month to the post-pandemic high of MOP20.8 billion, or MOP671 million per day in October, representing a 79 percent recovery versus pre-Covid, versus 77 percent for the first nine months of 2024.”

JP Morgan estimated Macau’s October mass-table plus slots GGR at just under MOP18.48 billion, itself a 6.6-percent year-on-year improvement, and 112.5-percent of the October 2019 mass-table plus slots GGR tally of just under MOP16.42 billion.

The brokerage’s analysts stated: “October GGR suggests the industry generated all-time high mass revenues – including slots – in Macau’s history, recovering to 113 percent of the pre-Covid record.”

They added: “This looks pretty impressive to us, considering headwinds from weak macro and consumer sentiment.”

The institution also estimated that fourth quarter GGR was likely to “edge up” quarter-on-quarter, which if realised, would mark “the first sequential rebound in three quarters”.

That would be “despite a likely softer-than-seasonal December” as in the bank’s view, China’s leader President Xi Jinping was “likely to visit Macau to celebrate the 25th anniversary of the city’s return to China”.

Macau’s October mass GGR reaches all-time high: JP Morgan
Viviana Chan - November 4, 2024
agbrief.com/news/macau/04/11/2024/macaus-october-mass-ggr-reaches-all-time-high-jp-morgan/

In October, the mass gross gaming revenue (GGR) of Macau’s gaming sector reached a new high, including slots, recovering to 113 percent of pre-COVID levels, notes JP Morgan.
This achievement is particularly impressive given the headwinds posed by weak macroeconomic conditions and consumer sentiment, notes the brokerage.

In addition, while December may experience a softer-than-usual performance—especially with President Xi expected to visit Macau to celebrate the 25th anniversary of the city’s return to China—GGR is projected to rise quarter-on-quarter in the fourth quarter, with JP Morgan forecasting an increase of 2-3 percent. This would mark the first sequential rebound in three quarters.

Overall, the in-line third-quarter earnings and margins suggest that downside risks to consensus estimates are currently ‘limited’.

October also saw Macau record its highest GGR in 57 months, with total revenue growing 7 percent year-on-year and 20 percent month-on-month, reaching MOP20.8 billion ($2.5 billion), or approximately MOP671 million ($83.8 million) per day.


This represents a 79 percent recovery compared to pre-COVID levels, slightly exceeding the 77 percent recovery observed in the first nine months of 2024. This robust performance was anticipated, particularly due to strong demand during the Golden Week holiday.

Base mass recovery remains ‘subdued’
In another investment note from Seaport Research, senior analyst Vitaly Umansky highlights that year-to-date through October, base mass recovery remains ‘subdued’, with estimates suggesting that base mass is still only around 80 percent of 2019 levels, while premium mass has been strong, exceeding 45 percent above 2019 levels.

With junkets largely removed from Macau, year-to-date VIP revenues are running at approximately 24 percent of the same period in 2019, primarily from direct VIP play.

Despite the challenges posed by soft consumer confidence, weak retail sales, and significant declines in luxury retail, gaming spend per customer remains robust. Seaport continues to view Macau gaming expenditure—particularly in the premium segment—as ‘resilient’, as the concentrated premium mass customer base continues to invest in the Macau experience.

Impact of crackdown on illicit money exchange
Beginning in early June, there has been a crackdown on money changers in Macau and their networks in China. Many of these networks utilize cryptocurrency for money transfers, an area that has gained increased scrutiny from authorities in China, alongside concerns about loan sharking activities.

Macau has seen a rise in criminal activity related to illegal money exchange over the past year. This issue has reached a national level, as Chinese authorities focus on the continued use of cryptocurrency to facilitate money movement, not solely tied to Macau.

Seaport notes that this crackdown may have a negative impact on money flows into Macau, leading some individuals to postpone their visits. However, the overall impact is likely to be minimal. There is no expectation of significant effects on GGR growth prospects going forward, although the next few months may witness ‘more conservative cash movements’ into Macau.

Continued announcements of new stimulus provisions from China are expected to enhance economic activity and consumer confidence in 2025. This could lead to stronger base mass recovery, alongside ongoing premium growth, resulting in an estimated GGR growth of 8 percent for 2025.

Despite concerns regarding GGR growth and geopolitical developments, gaming stock valuations remain ‘largely depressed’, creating a favorable risk/reward position. Seaport notes that at current valuation levels, investors are being compensated for taking on China-related risks.