Macau’s mass gaming revenues will grow by 25% year-on-year in 2024, and mass EBITDA by 34%, demonstrating greater resilience than broader China discretionary spend and defying investor fears that have kept industry share prices subdued, according to investment bank Morgan Stanley.
In a recent note, analysts Praveen Choudhary, Gareth Leung and Stephen Grambling described the multiple derating of Macau gaming stocks as “overdone”, with stocks down 15% in 2023 despite market-wide GGR growing by 334% year-on-year and industry EBITDA recovering to 70% of pre-Covid levels.
This decline was, they explained, due to investors worrying that Macau gaming revenue had peaked and might follow the decline in China consumption.
However, the analysts said they remain constructive on the sector, arguing that Macau earnings are “more resilient than those of China discretionary and we are confident of Mass GGR growth in 2024.
“Macau Mass GGR reached 110% to 120% of the 2019 level during the recent peak holidays, with spend per head remaining resilient/stronger than pre-COVID,” they wrote.
“We think part of this was enabled by 17% more hotel rooms added during COVID. We expect Mass GGR and industry EBITDA to grow 25% and 34% in 2024, respectively.”
Morgan Stanley has named MGM China and Wynn Macau – the two stocks derated the most last year by 32% and 25% respectively – as its top picks on strong valuation.
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