Macau GGR to reach US$53 billion in 2022

Macau gross gaming revenue (GGR) could reach as high as US$53 billion in 2022, driven by infrastructure, visitation and rising spending growth, wrote analysts from Morgan Stanley in a note this week. In a report titled: “Macau 2022 - Power of Compounding”, the brokerage says it believes the sector market cap will more than double by 2020, reaching US$230 billion.

"We think the quality of growth will be better, as more than 80% of the forecast profit should come from the mass market segment. Starting in 2018, we expect to see game-changer infrastructure developments with respect to HK-Zhuhai-Macao Bridge and Hengqin. We also think that by 2022, there will be clarity around license renewal, development capex and infrastructure ramp,” said the analysts.

"However, our long-term valuation could come down if there is either a one-time payment or increase in tax for the license renewal,” it noted.

In the near term, Morgan Stanley says that new hotel supply, better mix and a stable competitive environment will allow for outperformance. The brokerage added it has increased its 2018 GGR growth forecast to 11% (from 9%) and 2019 to 12% (from 8%).

Source: GMB / AG Brief