CLSA flags margin pressure, cuts 2027 GGR forecast by 4%

CLSA has cut its 2027 gross gaming revenue (GGR) forecast for Macau by 4%, stating that sluggish revenue growth and persistent cost pressures are likely to limit any recovery in casino operating margins.

In a report Tuesday, the brokerage said it now expects GGR to reach MOP259.2 billion in 2027, representing growth of 2.4% from its projected 2026 level.

It also reduced its 2028 forecast by 3% to MOP270.4 billion, implying annual growth of 4.3%. CLSA added that it had “not seen enough supportive macro indicators” to justify a stronger forecast.

The revised outlook represents a more cautious view of Macau’s post-pandemic recovery, which has been led by premium customers and visitor arrivals rather than a broad-based revival in spending.

According to CLSA, growth next year is expected to come mainly from higher visitor volumes, aided by easier year-on-year comparisons in June and July and a renminbi that remains structurally stronger against the Macau pataca.

The group expects gaming revenue per visitor to stay broadly stable, but said catalysts for a more sustained phase of growth “do not appear to be imminent,” it added.

For full-year 2026 GGR, CLSA maintained its estimate at MOP253.2 billion, implying annual growth of 2.3%. That compares with its 2027 projection of MOP259.2 billion, a gain of MOP6 billion. In addition, CLSA raised its September GGR forecast to MOP18.6 billion, up 1.7% year on year.

The increase is partly because last September’s comparison was affected by a typhoon-related casino closure.

A more guarded outlook

CLSA’s update follows a weaker second quarter for Macau operators, with aggregate property-level operating expenses, excluding depreciation and amortization, rising 2% year on year even as market-wide GGR slipped 0.1%.

Reported sector EBITDA fell 10.7% to USD1.81 billion, 2% below CLSA’s previous estimate. EBITDA as a share of GGR declined to 24.2% from 26.8% a year earlier, a fall of 2.6 percentage points that illustrates the sector’s difficulty in converting modest revenue growth into profit expansion.

The capital markets and investment group said operating cost pressure “does not dissipate easily,” citing annual salary increases announced by all six Macau concessionaires since 2024. It added that meaningful margin expansion would be difficult if GGR continues to increase only at a low-single-digit pace, especially if operators maintain investment in premium customer acquisition, property upgrades and non-gaming commitments.

The brokerage also pointed to weakening signals from China’s industrial economy, which it uses as a leading indicator for Macau’s premium gaming demand. The gap between China’s producer price index and purchasing price index has been negative since February and widened to negative 3.31 percentage points in August, largely because of higher oil prices.

CLSA said the indicator has led year-on-year changes in Macau GGR by about six months since 2005.

China’s consumer confidence and expectation indices also remained between 86 and 87 from March through July, below the February level of 88, suggesting household sentiment has yet to improve decisively.

For the final quarter of 2026, CLSA expects GGR to decline 0.8% year on year to MOP65.5 billion, or about $8.13 billion.