Citi, JP Morgan raise January gaming revenue forecast to MOP18 billion

Based on industry channels, Macau’s GGR for the first 14 days of January reached MOP8.6 billion, or an average gross gaming (GGR) revenue of MOP600 million per day last week, which was 5% lower than the first week of January, Citi Research has reported.

According to Citi’s research, Macau’s VIP GGR has been largely flat month-on-month in recent weeks. Taking into account recent GGR trends, Citi conservatively raised its forecast for January 2024 from MOP17.5 billion to MOP18 billion, which is equivalent to about 72% of January 2019 levels.

This also implies that Macau’s average daily GGR for the rest of January 2024 is expected to be about MOP553 million.

Along the same lines, JPMorgan understands that Macau’s GGR for the first 14 days of January will be MOP8.6 billion, or MOP614 million per day, which implies that last week’s daily GGR was MOP600 million. This is significantly lower than that of the New Year’s holiday, but the performance is still quite solid on a seasonal basis, JPMorgan has clarified in its own report.

JPMorgan expected January GGR to meet market expectations, reaching MOP17.5 billion to MOP18 billion. Although there are still challenges to the macroeconomic environment, JPMorgan remains optimistic towards Macau’s casinos in this Year of the Dragon.

Meanwhile, Morgan Stanley said in its own research report that it remains positively disposed to Macau’s gaming industry, believing that gaming companies will outperform the performance of China’s consumer market in their earnings, as well as suggesting that valuations in the industry have fallen too far. The key themes for this year’s stock selection will be market share trends and corporate operating leverage levels.

The broker pointed out that casino stocks performed strongly in 1H23, but lost momentum in 2H23 due to concerns that Macau’s GGR had already peaked, leading to an ultimate drop of 15% for the whole year and thus underperforming the HSI by about 2 ppts. It is expected that GGR will grow significantly this year, and that the growth of mass market business is expected to be strong. It is predicted that the annual mass GGR and industry EBITDA will grow by 25% and 34% year-on-year respectively. Staff reporter