Macao Top Players Spend Higher Business Costs

Luxury gamblers come to Macau more often and “gambling more” than ever before, according to a memo from Morgan Stanley Asia Ltd. Here’s a summary of the analysis team’s trip to the casino hub this month.

The broker said six Macau operators expected capital and operating costs to rise next year, mainly due to the increase in salary payments and investment spending promised to the Macau government.

Morgan Stanley “meaningful” on prospect of dividend payments from operators “before 2025” as Macau gaming companies are likely to “prior” their “deleveraging” efforts…I don’t expect a recovery,” he added.

“Operators have seen per capita spending by premium bulk gamblers remain above 2019 levels,” analysts Praveen Chaudhary and Gareth Leung wrote, referring to the category of players betting on high denominations with cash chips rather than biroling chips traditionally used in the junket-based VIP segment.

The analysts added, “Some [operators] have even noticed that high-end customers visit Macau more often, despite a sequential decline in Chinese consumption/overall macroeconomics.” They are referring to macroeconomic indicators in mainland China, the main source market for the latter’s Macau operators.

“Some operators have seen new young gamblers (in their 30s) spend similar money between their 40s and 50s, the older key gamblers,” the Morgan Stanley team added.

In terms of business costs, the agency said it expects Macau’s concessions to “follow the Macau government and raise wages by 2% to 3% in 2024.

It was a reference to comments made in November by the city’s economy and finance minister, who urged casino employees to raise their salaries in 2024. His comments came shortly after the Macau government announced it would raise salaries for civil servants by 3.3%. Since then, comments from local labor representatives have called for similar action in the casino sector.

Morgan Stanley added: “We believe non-gaming investments in casino sales and the operating expenditure portion of potential competition could put “upward pressure” on overall casino operating costs.

“Companies will accelerate out-of-game spending in 2024,” the brokerage said regarding capital spending.

Macau’s Chief Executive Hoat Seng said on Wednesday the government expects Macau’s 2023 total casino gaming revenue (GGR) to exceed the MOP of $180 billion ($23.29 billion).

Under the new concession agreement with six operators in Macau, which took effect in January 2023, the casino company will have to increase the total MOP 108.7 billion pledged to the local government by up to 20% in the event that Macau’s annual GGR reaches or exceeds MOP 180 billion.

BY: 홀짜게임

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