No clear inflection point for Macau GGR and profitability amid subdued demand: CICC

There is “no clear near-term inflection point” in either Macau casino gross gaming revenue (GGR) or sector profitability, and investors might have underestimated the weakness in gaming demand. So suggested brokerage China International Capital Corporation Hong Kong Securities Ltd (CICC), in a research note. The institution noted a divergence in Macau between rising visitor volume and actual performance of casino gross gaming revenue. CICC said it had a “cautious” stance on the Macau gaming sector, highlighting the institution’s downward revision of forecasts on Macau sector-wide GGR and adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) for 2026 and 2027. “Given weak fundamentals so far in the second half of 2026, a high comparable base for the RMB-HKD [Chinese renminbi-Hong Kong dollar] exchange rate, and a lack of new supply or other catalysts in 2027, we cut our 2026 and 2027 total GGR forecasts” for Macau, wrote CICC analysts Shengyong Goh, Jiayu Wang, and Nanxi Liu. The brokerage is expecting total GGR to decrease 1 percent and 7 percent year-on-year in 2026 and 2027, to be at 85 percent and 79 percent of pre-pandemic 2019 levels. The analysts anticipate Macau’s mass-market GGR will rise 1 percent year-on-year in 2026, followed by a decline of 6 percent in 2027. They forecast the city’s VIP GGR to shrink 10 percent year-on-year, in 2026 and 2027, respectively. Following its GGR-forecast revisions, CICC noted that it has cut its 2026 and 2027 adjusted EBITDA estimates by 7 percent and 24 percent respectively, to approximately US$7.73 billion and US$7.02 billion. That would translate to year-on-year declines of 5 percent and 9 percent. “Without meaningful new supply or policy changes or other catalysts to demand [side], we expect sector recovery to come later than we previously expected,” wrote the CICC analysts. The brokerage observed several Macau casino operators appeared to have a “hiring freeze” for frontline gaming sales roles. It could be indicative of the operators’ cautious outlook on “near-term business growth and staffing needs”, said CICC. “It suggests management is preparing for a more subdued period of growth, not a near-term acceleration in GGR. We think this shift in operations is consistent with our cautious sector stance,” the brokerage noted. CICC also believed the market has not yet fully priced in the “weakness” in demand for Macau gaming. “We expect to see further consensus downgrades following third quarter-2026 results announcements as the market will likely look beyond short-term support from seasonality, holidays, and RMB appreciation,” CICC mentioned. Demand and visit volume diverge The brokerage noted a divergence between Macau’s “strong” visitor arrival volume during the recent October Golden Week holidays, and GGR performance, suggesting consumer demand for what it termed premium gaming, remained “soft”. “According to the Macao Government Tourism Office (MGTO), average daily” visitor volume during the holiday season – from October 1 to 7 had “increased by 9 percent year-on-year”. “However, we estimate the GGR for October 1 to 11 to have declined 5 percent year-on-year on a like-for like basis, with ADR [average daily revenue] at MOP836 million [US$103.5 million],” wrote CICC. Its analysts added: “We think the divergence between stronger visitor traffic and weaker GGR points to a deterioration in average spending power. “This suggests that premium demand remains soft and that the current recovery in traffic is being led by lower-spending visitors.” CICC also observed that Macau’s entertainment-event calendar appeared to have become “less appealing” as a route to boosting visitor volume. Macau was also facing competition for large-scale sports or entertainment events, from neighbouring Hong Kong’s Kai Tak Stadium. The latter is a 50,000-capacity facility with retractable roof, which opened in March 2025 at the Kai Tak Sports Park in Kowloon, Hong Kong. “In the three years from 2023 to 2025, Macau SAR’s event strategy helped broaden its non-gaming appeal, supported by a growing roster of concerts, sports tournaments, and other mega events,” the CICC analysts remarked. But they added regarding Macau: “We believe the 2026 event calendar appears increasingly reliant on recurring formats and returning acts following several years of intensive event rollout. “We think the reduced novelty of the content offerings may limit its ability to generate incremental visitation or encourage repeat visits, particularly among leisure customers seeking new entertainment experiences.”