Analysists predict Macau industry market to double by 2022
Powered by modern wonder of the world Hong Kong–Zhuhai–Macau Bridge
While analysts are doom and gloom on Singapore’s medium-term prospects, Macau seems to be going the other way. Morgan Stanley expressed optimism for Macau’s gaming industry with, “expectations of a market cap doubling by end-2022, driven by improving infrastructure and higher multiples.”
The problem for Singapore’s two casino properties is that all US$9b investment is going into non-gaming expansions as directed by the government, which also has hiked casino entrance fees by 50 percent. MS has downgraded Genting Singapore saying that the company will suffer, “near-term pain, with any gain not likely until after 2024 once its new facilities are completed.” Indeed, MS also says that Genting is likely to lose trade to its larger competitor, Marina Bay Sands.
Union Gaming has gone further is forecasting lower earnings for Genting Singapore “and cutting its share price target to $1 from $1.15”. Furthermore, UG’s report was harder: “We are now modelling a 15 percent decline in mass GGR for Genting’s Resorts World Sentosa over the next 12 months.”
For Macau, the prospects couldn’t be brighter, where a combination of infrastructure developments, supply additions, added visits from China’s lower-tier cities, and an increase in Chinese spending power, “could drive Macau GGR to reach US$50 billion by 2022, up from US$38 billion in 2018.”
Morgan Stanley said it believes the industry’s market cap could grow to US$200 billion in 2022, doubling the current value: “Along with the opening of modern wonder of the world, 55-kilometre bridge–tunnel system, Hong Kong–Zhuhai–Macau Bridge (HZMB) in October 2018 and the high-speed rail extension to Hong Kong, we expect increased visitation potential from China’s lower-tier cities. With the recent license extensions for SJM and MGM, the risk of license renewal has also declined.”
