Macau's Gaming Revenue Rises in June but Falls Short of Expectations

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Macau witnessed a substantial increase in gaming revenue during June, as reported by the Macau Gaming Inspection and Coordination Bureau. The region's gross gaming revenue (GGR) experienced a remarkable 514% year-over-year surge, reaching MOP15.21 billion (US$307 million).

This rebound was attributed to the resurgence of live performances in Macau and the bustling four-day Dragon Boat Festival holiday. The latter drew a significant influx of visitors to the Chinese special administrative region (SAR), giving it a much-needed boost.

Despite the notable recovery, the GGR result fell slightly below analysts' consensus estimate of a 530% year-on-year increase. Furthermore, the June GGR showed a 2.3% decline compared to the revenue generated in May, raising concerns among market observers about the pace of Macau's post-pandemic recovery. As trading resumes on Monday, casino operators may face downward pressure on their share prices due to this sequential slowdown.

More Recovery Needed

Experts emphasize that the recent dip in growth does not necessarily indicate a stumbling recovery. JPMorgan analysts pointed out that the monthly sequential change from May to June has historically averaged a 14% decline, considering data from 2007 to 2022 (excluding the lockdown year of 2020). This perspective provides some reassurance for the long-term outlook of the market in Macau.

During the first half of 2023, Macau's gross gaming revenue demonstrated an impressive 205% year-over-year increase, amounting to MOP80.14 billion (US$9.93 billion). Despite this strong rebound, the figure still falls significantly short of the pre-pandemic performance, with the equivalent revenue for the same period in 2019 reaching MOP149 billion (US$18.41 billion).

The easing of the COVID wave in China is considered a crucial factor driving the general rebound in Macau's GGR, according to Roth MKLM analyst Edward Engel. As the region prepares for upcoming earnings reports, Morgan Stanley analyst Praveen Choudhary anticipates that Q2 could mark the first quarter where mass revenue and EBITDA (earnings before interest, taxes, depreciation, and amortization) levels approach pre-COVID figures.

Morgan Stanley holds an optimistic view of the sector, noting improved spending per visitor trends, a robust concert calendar scheduled for Q3 and positive developments in net debt levels.

Recent news highlights the positive impact of the Dragon Boat Festival holiday, contributing to the surge in visitors to Macau. Data from the SAR’s Public Security Police indicates that nearly 367,000 visitors flocked to the region during the holiday break, further boosting tourism and gaming revenue.

Dragon Boat Festival Gives Big Boost

Moving forward, investors and industry stakeholders will closely monitor the performance of Macau's gaming sector as the region's recovery trajectory plays a pivotal role in shaping market sentiment and investment decisions. It is worth noting that MGM Resorts, Wynn Resorts, and Las Vegas Sands have displayed strong growth in the first half of the year, while Melco Resorts & Entertainment experienced a more modest increase during the same period.