CLSA lowers 2024 GGR projections for Macau?

Independent brokerage and investment company CLSA Ltd has updated its forecast for Macau’s gross gaming revenue (GGR) and earnings before interest, taxation, depreciation, and amortization (EBITDA) for 2024 and 2025. The brokerage now expects Macau’s GGR for 2024 to reach MOP232.7 billion (€26.5 billion), representing a 27 percent year-on-year increase, and predicts a 3.9 percent growth to MOP241.7 billion (€27.5 billion) for 2025. 

The Macau Daily Times reported that the adjustment follows a seasonally weak June, with Macau’s GGR hitting a year-low at MOP17.69 billion (€2 billion). According to CLSA analysts, this can be attributed to China’s intensified crackdown on illegal money exchange activities, leading to increased vigilance and a reduction in the number of inbound visitors. Meanwhile, analysts attributed the decline in June’s GGR to several factors, including the seasonal post- “May Day” holiday slowdown and the impact of the UEFA Euro 2024 football tournament.  

Analysis of recent trends?

The revised projections for 2024 and 2025 reflect a decrease of 3 percent and 5.3 percent, respectively. This adjustment considers the second-quarter 2024 GGR of MOP56.4 billion (€6.4 billion), which is 1.6 percent lower than the first quarter of 2024. Additionally, the impact of China’s enhanced measures against unauthorized money exchange activities has been factored into these projections. 

Last month, China launched a campaign aimed at reducing capital flight and illegal loan practices. The Chinese government has been tightening controls on unauthorized currency exchanges to prevent tourists from exceeding the mainland currency limit allowed across the border.   

EBITDA and sector performance?

CLSA has also lowered its forecast for the gaming sector’s EBITDA due to increased promotional activities and rising payroll costs. For 2024, the adjusted sector EBITDA is expected to have an 8 percent decrease from previous estimates. The forecast for 2025 is down by 5.8 percent.  

Long-term outlook?

Despite these lowered forecasts, CLSA analysts remain positive about the long-term prospects for Macau’s gaming sector. They believe that stable financial positions and reasonable competition among operators will help the sector navigate these short-term regulatory challenges. 

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