Macau's Gaming Revenue Normalizes After CNY Surge JP Morgan

Is Macau's gaming revenue back to normal after Chinese New Year?  JPMorgan's report suggests so, with February GGR projected at MOP18.3-19.4 billion.

Macau's gross gaming revenue (GGR) for the first 16 days of February reached MOP11.9 billion (approximately US$1.48 billion or PHP82.2 billion), according to a recent JPMorgan research report. This translates to an average daily GGR of MOP743 million (approximately US$92.9 million or PHP5.1 billion). 

However, the report highlights a significant drop in the average daily GGR last week to MOP642 million (approximately US$80.3 million or PHP4.4 billion), down from MOP725 million (approximately US$90.6 million or PHP5 billion) during the Chinese New Year period. This normalization aligns with market expectations, as the festive season typically drives a surge in gaming activity.

JPMorgan's current forecast for February's total GGR ranges from MOP18.3 billion to MOP19.4 billion (approximately US$2.29 billion to US$2.42 billion or PHP126.8 billion to PHP134.4 billion). This projection represents a potential year-on-year change of between a 1% decline and a 5% increase.

The brokerage firm continues to favor Galaxy Entertainment (00027.HK) as its top pick in the Macau gaming sector. They also maintain Overweight ratings for MGM China (02282.HK), Wynn Macau (01128.HK), and Sands China Ltd (01928.HK).

Conversely, JPMorgan has assigned a Neutral rating to SJM Holdings (00880.HK) and an Underweight rating to Melco International Development (00200.HK).

Macau's gaming revenue took a hit in January, with gross gaming revenue (GGR) falling 5.6% year-on-year to MOP$18.25 billion (US$2.27 billion). This decline, attributed largely to the timing of the Lunar New Year holiday, missed analyst expectations and raises concerns about the pace of Macau's post-pandemic recovery. While some anticipated a smaller dip due to pre-holiday activity, the industry's performance underscores the ongoing challenges facing Macau's gaming sector, including new regulations and a shift in focus towards mass-market players.

Despite the January setback, Macau authorities remain optimistic, citing the city's strong fundamentals and maintaining a full-year GGR forecast of MOP 240 billion (US$29.9 billion). However, analysts are divided on whether this target is attainable given the current economic climate in China and the lingering effects of regulatory changes and restrictions on junket operators. The coming months will be crucial in determining if Macau's gaming industry can rebound and meet its revenue goals.

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