JP Morgan: GGR falls to six-month low in June

Macau’s gross gaming revenues (GGR) have fallen to their lowest level in more than six months in June, with GGR for the first 23 days estimated at MOP13.3 billion or MOP578 million per day, according to JP Morgan’s weekly channel checks.

“This suggests the daily run-rate fell to MOP514 million over the past week, the lowest level in over six months,” wrote JP Morgan’s analysts DS Kim, Mufan Shi and Selina Li.

The JP Morgan analysts attributed this decline mostly to soft seasonality, such as post-holiday slowdown and the impact of UEFA Euro 2024, as well as poor VIP win rates. They also noted that June is typically the seasonally weakest month of the year.

Despite the decline, JP Morgan still forecasts June’s GGR to reach between MOP$17.5 billion and MOP18 billion. For the second quarter to date, GGR is likely to edge down 2% to 3% quarter-on-quarter, led by a 2% decline in mass and 5% in VIP.

In May, Macau’s mass GGR reached an all-time high at 115% of pre-COVID levels, according to JP Morgan. The bank noted that GGR in May jumped nearly 30% year-on-year to MOP20.2 billion, implying a daily run-rate of MOP651 million.

On the contrary, according recent report from Moody’s Ratings, Macau’s casino industry is poised for a stronger recovery in earnings and cash flow over the next 12 to 18 months when compared with other Asian gaming markets. This is driven by an expected rebound in visitor numbers as the region continues to emerge from the pandemic. However, the outlook is more uncertain for casinos in other parts of Asia as the Chinese government appears to be discouraging its citizens from gambling overseas.

The report states that Moody’s expects full-year gross gaming revenue (GGR) in Macau to reach 75% to 80% of pre-pandemic 2019 levels by 2024 and 2025, compared to just 63% in 2023 and 14% in 2022.

“The pace at which revenue improves will slow compared with the surge in 2023 after China ended pandemic border restrictions,” the report authors noted. They added that the 2024 improvement would be “despite slower economic growth in China this year than last year.”

Moody’s observed that in the first quarter of 2024, Macau’s GGR was already 75% of 2019 levels, and tourist arrivals to the city increased by 79% year-on-year. The report also found that mass-market GGR in the first three months of 2024 was 110% of 2019 levels, and is expected to reach 115% by 2025, driven by growth in the premium mass-market segment.

However, the report warned that strict regulations for junket operators are likely to continue to curtail growth in Macau’s VIP gaming market.

In contrast, the outlook for other Asian casino markets is less certain, with Moody’s noting a “potential risk” to recovery rates for tourism and casino revenue due to reports that “Chinese embassies have warned citizens against gambling overseas.”

The report stated that gaming operators in Singapore and Malaysia will be less exposed to this risk than those in Cambodia, as they are less dependent on Chinese tourists and have significant non-gaming operations.  TC/NS