Morgan Stanley forecasts GGR growth of 28% in 2024

The gross gaming revenue (GGR) of local casinos should grow this year by 28%, investment bank and wealth management firm Morgan Stanley has forecast.

According to Morgan Stanley analysts Praveen Choudhary and Gareth Leung, the strong performance of Macau’s gaming industry, particularly at the end of 2023, bodes well for 2024.

The analysts assert that GGR should, in 2024, grow from 62% of the 2019 level to 80% of the pre-pandemic level, constituting an increase of 28%.

The forecast comes after the release of official figures from both December and the whole of 2023. It acknowledges a stronger-than-expected result for the gaming industry, which closed the year with a gross accumulation of MOP183.06 billion.

The December results contributed significantly to this total figure, closing with a monthly total of MOP18.567 billion. December reported the second highest monthly GGR of 2023, surpassed only by October (MOP19.501 billion).

Commenting particularly on the result of December, the analysts noted that it “accelerated faster than traditional seasonality.”

Historically, December’s GGR performance has not been strong. In 2019, the month was, in GGR terms, the second lowest of the year, trailing September’s results.

Expenditure also likely to increase

In an earlier note published in December 2023, the same Morgan Stanley analysts also projected that concessionaires’ expenditure – in terms of both Operational Expenditure (OpEx) and Capital Expenditure (CapEx) – would also likely increase in 2024.

Such a rise would be the result of increases to both employee wages and contracted mandatory non-gaming investments.

“We expect Macau gaming companies to follow the government and increase employee wages by 2% to 3% in 2024,” the analysts said, adding that the traditional, one-month salary bonus should also remain in place.

“The OpEx portion of non-gaming investment, as well as the potential competition between gaming hosts and their clients, could put upward pressure on OpEx. On CapEx, we think companies will accelerate their non-gaming spending in 2024. Sands has the capacity to have 76% of its committed investment in CapEx while other operators will need to spend more on OpEx, which could impact their profit margin.”