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Macau Casinos Earning $77M a Day in March

JP Morgan Securities (Asia Pacific) has released a bullish report on Macau's casino industry for the first quarter of 2024. Looking at the first 24 days of March, the daily gross gaming revenue (GGR) averaged MOP621 million (US$77.1 million), translating to a cumulative GGR of roughly MOP14.9 billion (US$1.73 billion) for the period.

This daily run-rate is particularly noteworthy because it's only slightly below the impressive MOP630 million daily average observed in the first two months of the year. JP Morgan analysts DS Kim, Mufan Shi and Selina Li emphasize that this outperforms the historical trend of a 4% slump in March compared to January and February. They further highlight the consistency of the run-rate throughout the last week, averaging a steady MOP628 million (US$77.9 million) daily, indicating sustained strong demand from patrons.

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The JP Morgan report estimates suggest that mass GGR, largely driven by slot machines, is currently hovering at around 110% of pre-pandemic levels. This aligns with the positive trajectory observed in the initial two months of 2024 and surpasses the 104% recovery rate witnessed in the fourth quarter of 2023. This strong performance, according to the analysts, could translate to a 3% to 4% growth in mass gaming demand for the first quarter of 2024, exceeding the historical seasonal growth of just 2%.

Related: Macau Gaming Tax Revenue Close to $2B in Just Two Months

While mass GGR shows significant improvement, VIP volume, catering to high-rollers, appears to be lagging behind. The report suggests VIP volume remains stagnant at around mid-20s of pre-pandemic levels, indicating a lack of substantial change in underlying demand within this segment.

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Reaching New Heights

Despite the slower recovery in VIP gaming, JP Morgan maintains a positive outlook for the overall industry. The analysts project March to reach a GGR of approximately MOP19 billion (US$2.35 billion), pushing the first-quarter GGR to a projected growth of 5% compared to the previous quarter.

This translates to a year-on-year increase of over 60%, potentially setting another post-pandemic high for Macau's casino industry. This positive outlook is further bolstered by the fact that March historically experiences a slowdown compared to the initial months of the year, making the sustained performance even more impressive.

However, some analysts caution that challenges remain. The report acknowledges the ongoing recovery from the pandemic's impact, particularly on VIP travel. Additionally, factors like global economic conditions and potential travel restrictions due to new Covid variants could impact future performance. Nevertheless, JP Morgan's report offers a promising view of Macau's casino industry for the first quarter of 2024, highlighting its resilience and potential for continued growth.

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