Upcoming July Gaming Revenue in Macau May Set Record Post-COVID-19 Era
Macau's casino operators managed to generate significant gross gaming revenue (GGR) in the first 16 days of July, despite typhoon warnings hampering their efforts. This puts the month in a strong position to become the best in terms of GGR since the start of the COVID-19 pandemic.
The mass-market segment has been a key driver of this growth, with JPMorgan estimating a $1.03 billion GGR for July 16. This translates to an average of $64 million per day, slightly surpassing the second-quarter run rate of $62 million per day. However, typhoon warnings in recent days have reduced the July run rate to $61 million. Regardless, analysts predict this month will still be a good one for the concessionaires.
According to JPMorgan analysts DS Kim and Mufan Shi, "We still see July printing the highest GGR since the pandemic, north of $1.99 billion." This would indicate that mass GGR is running at more than 90% of pre-COVID levels, and the analysts predict a complete recovery in mass GGR by October.
Macau casinos collected $1.88 billion in June and $1.93 billion in May, making those months the special administrative region's (SAR) most lucrative GGR months since January 2020.
Timing of JPMorgan's Forecast
JPMorgan's GGR forecast for July is particularly significant as it comes just ahead of Macau casino operators' second-quarter financial results. These reports could include insights into performance in the current quarter.
The first gaming industry earnings report is expected to be released on Wednesday when Las Vegas Sands (NYSE: LVS) shares its results after the U.S. markets close. The company behind five Macau integrated resorts is projected to report earnings per share of 42 cents on revenue of $2.38 billion. In the past 90 days, eight analysts increased their estimates for Sands while one lowered their forecast.
Morgan Stanley analyst Stephen Grambling has identified Sands as the firm's top casino stock idea, suggesting it's the best way to capitalize on the Macau recovery.
If management teams express optimism about their projections for the second half of 2023, this could ignite a rally in Macau equities. GGR is currently approximately two-thirds of what it was in 2019, with some analysts predicting this figure will be fully restored by the end of the year.
Margins and Macau GGR
Elevated margins could contribute to better run rates and higher GGR as 2023 progresses. JPMorgan is positive about this possibility, as the analysts indicate that Macau margins could reach record highs during the June quarter.
Galaxy Entertainment and Sands China have benefited from the vibrancy among mass and premium mass gamblers, with these concessionaires already established in those segments. However, data suggests that the VIP segment is on the rebound and could become a more substantial contributor to GGR in the second half of 2023.
Read also:
- What's making the Bayern leader appear so anxious?
- Most supporters desire Neuhaus to remain with the team.
- The referee for the upcoming cup final has been declared.
- Wohlgemuth announces two new names.
Source: www.casino.org
