Morgan Stanley forecasts GGR to approach 90% of pre-pandemic levels

Morgan Stanley has again raised its forecast for the city’s gaming industry as the sector has been painting a rosy picture, following nearly three years of bleeding cash every day.

The banking group expects a 2023 mass GGR of USD19.9 billion (88% of 2019) and 2024 mass GGR of USD25.7 billion.In a note, analysts Praveen K Choudhary, Gareth Leung, and Stephen W Grambling said that the gaming sector is seeing a strong recovery. The sector recorded MOP14.7 billion in revenue for April, the highest monthly taking since January 2020.

The figure also represents a surge of 449.9% year-on-year, partly driven by the pent-up demand of Chinese tourists after the country’s reopening. Last month’s recovery represents a 15.6% increase compared to the previous month.

Also, the institution has raised its estimates for Sands China and MGM China, two of the big six which have announced their first quarter earnings.

Venetian Macau was the main revenue driver for Sands China, bringing in USD446 million in casino revenue and USD558 million in net revenue. Their first quarter earnings rose 132.1% year-on-year to nearly USD1.28 billion.

By comparison, MGM China recorded a revenue increase of 131.2% year-on-year to HKD4.8 billion for the first quarter, reaching 84% compared to the first quarter of 2019.

“We increased Sands 2023 EBITDA [estimate] by 23% to reflect its better-than-expected first-quarter 2023 results, higher mass market-share assumptions, and higher industry estimates,” said the Morgan Stanley team.

For MGM, it has estimated that the gaming operator would see an EBITDA increase of 23% to HKD 5.96 billion.  LV