Operator News
China – Morgan Stanley pitches 41 per cent improvement for Macau’s casino revenues next year
By Phil - 17 December 2021
Morgan Stanley believes the recovery of Macau’s casino sector will be similar to that in 2016 following Chinese President Xi Jinping’s corruption crackdown which hampered Macau’s VIP sector.
It is predicting a 41 per cent improvement in GGR next year and highlights Wynn and Galaxy as top perfomers.
Analysts Praveen Choudhary, Gareth Leung and Thomas Allen said: “GGR growth in 2022 should drive outperformance like 2016. Macau stocks’ market cap bottomed in January 2016, roughly 12 months after GGR growth year-on-year bottomed at -50 per cent in early 2015. But by January 2016, GGR growth rate was 20 per cent and it was visible at that time that year-on-year would turn positive sometime in the later part of 2016. This drove a material stock price rebound of 26 per cent year-on-year in 2016.”
They added: “We see a similar trend in 2022, where year-on-year growth will accelerate even though it’s still at a lower level than 2019. This should drive outperformance in 2022.”
Morgan Stanley expects the sector to be boosted by the licence renewals being detailed along with new gaming legislation.
“Each of these events will provide clarity even if the Macau Chief Executive temporarily extends the licenses beyond June 2022, which we expect could be announced by in 1Q22,” it added.
