Casino revenues in Macau are outpacing last summer’s and those in November. But they’re 2.9 percent off Wall Street projections, according to Jefferies Equity Research analyst David Katz. His findings were published in a December 16 investor note.
Katz forecast gambling winnings for the industry that would come in at the lower end of Macanese governmental estimates. “Looking ahead, we still consider visibility limited in the region and the risk reward for stocks approximately balanced,” he cautioned.
The analyst still expected gambling activity to be tamped down during Chinese President Xi Jinping’s December 18-20 visit. But he noted that revenues jumped during the week of December 8-15, climbing from $70.2 million per day to $72.2 million week over week.
Jefferies’ market checks had players’ losses averaging $71.2 million per day for the month so far, with mass-market play as much eight percent lower. VIP play slipped an average of 7.5 percent.
Looking ahead, Katz forecast casino winnings ranging between $68.7 million per day and $77.5 million, implying full-month revenue of $2.1 billion to $2.3 billion. Previous estimates had pegged that range to be incrementally — but not substantially — lower.
The presidential stayover was expected to be accompanied by a tightening of access to Macau. Afterward, Katz predicted, visitation would improve more than gambling revenue, “as the Christmas holiday is not as big a revenue driver as [Chinese New Year] in Feb. and Golden Week in the fall.”
Prior expectations, he wrote, are that December revenue would improve on 2023’s, at an average of $71.2 million per day, compared to last year’s $66.1 million. That would still lead to a modestly negative finish for Macau-facing stocks, given that the enclave is on course for a 2024 tally of $28.2 billion. That would be at the low end of official Macanese projections.
Las Vegas Sands and Galaxy Entertainment were the only stocks on which Katz placed high hopes. He noted that the former’s restoration of 3,800 hotel rooms to the market would help it gain share. He expected Galaxy to perform similarly, given the relatively recent addition of its Raffles Hotel to Macau’s room inventory.
