Investment bank Morgan Stanley has raised its Macau GGR and EBITDA growth forecasts for 2025, and operator price targets by 30% across the board, following two consecutive monthly beats in June and July.
In a Monday note, Morgan Stanley analysts Praveen Choudhary, Anson Lee and Stephen Grambling said they now expect Macau market GGR to grow by 10% year-on-year in 2025 – up from their earlier 5% forecast – and EBITDA by 6%, up from 2%.
This comes after Macau’s Gaming Inspection and Coordination Bureau (DICJ) on Friday announced that gaming revenues had grown by 19% year-on-year to MOP$22.13 billion (US$2.73 billion) in July, mirroring the 19% growth achieved in June. Neither month had been anticipated at such strong levels.
Macau GGR, having grown by only 1% in Q1, surged to 8% growth in Q2 while Morgan Stanley noted that the June and July figures “surprised us and consensus”.
The primary driver for the uptick, they explained, is “higher visitation (+25% year-on-year in 2Q25 from mainland China) owing to easier visa issuance (multi-entry visa for Shenzhen and Zhuhai, more IVS cities added), increases in concerts featuring popular Asian performers and a higher number of junkets.
“Macau has also benefited from reductions in mainland and Hong Kong visitors to Thailand and Japan lately, and RMB strength has helped as well.”
The analysts also observed that their new 2025 GGR forecast shifts the needle for Macau to a genuine growth industry once again.
“We previously highlighted our framework in which mass revenue growth of more than 5% would drive operating leverage and reduce competition,” they wrote.
“Our new estimate of +10% year-on-year would result in estimate increases and re-ratings as Macau moves from an ex-growth industry to growth. With China consumption still weak, Macau should provide welcome relief for investors.”
Preferred stocks are MGM and Melco, which Morgan Stanley believes are supported by attractive valuations and lower embedded growth expectations – suggesting limited downside risks and greater potential for estimate increases.
