CLSA trims 2027 and 2028 Macau GGR growth forecasts, voicing caution on sector’s outlook

Brokerage CLSA has cut its growth forecasts on Macau’s casino gross gaming revenue (GGR) for 2027 and 2028, saying it has a “more cautious” view on the sector than previously, and citing lack of “supportive” macroeconomic indicators. CLSA cut its 2027 Macau casino GGR estimate by 4 percent, to MOP259.2 billion (US$32.1 billion) and its 2028 forecast by 3 percent, to MOP270.4 billion. Its 2026 forecast is for MOP253.2 billion, “largely unchanged” from its previous calculation. While there had been “notable recovery” in Macau’s GGR and visitor volume after the FIFA World Cup 2026, a football tournament held from June 11 to July 19, the institution stated “we do not think macros are supportive enough to drive incremental growth from the current revenue run-rate”. This was “despite cyclical factors such as low base effect in summer 2026,” due to the World Cup, and “possible mean reversion in VIP win rates etc,” wrote CLSA analyst Jeffrey Kiang. A number of investment analysts had suggested the World Cup had diverted consumers away from Macau casino gambling during the summer. CLSA noted in its latest memo: “As such, we become more cautious and lower our 2027 and 2028 [Macau] GGR. We expect GGR to grow only 2.4 year-on-year to MOP259.2 billion in 2027, followed by 4.3 percent [growth] to MOP270.4 billion in 2028.” Per the institution’s latest forecasts, the average daily Macau GGR run-rate would be MOP710 million in 2027, and MOP739 million in 2028. The more modest expectation for Macau’s 2027 GGR growth is due to a “lacklustre” gross industrial profit indicator in China. China macro headwinds This was despite the country’s currency, the renminbi, being likely to record 2 percent appreciation against the U.S. dollar in 2027. That could act as a “tailwind” for Macau’s inbound-visitor volume and GGR, suggested CLSA. Macau casino bets are primarily denominated in Hong Kong dollars, a currency pegged to the U.S. dollar. Macau’s currency, the pataca, is indirectly pegged to the U.S. dollar. China’s gross industrial profit indicator is the spread between China’s producer price index and purchasing price index. CLSA argued that since July 2005, this indicator has led Macau’s year-on-year percentage change in casino GGR by roughly six months. Mr Kiang stated: “Assuming such a correlation continues to hold, macro headwinds remain for Macau as the aforesaid spread has been negative since February at -0.31 percentage points.” He added: “The negative spread has widened to -3.31 percentage points in August 2026 primarily due to higher oil prices.” The analyst further noted: “An intact correlation should suggest a setup with minimal room for positive surprises will continue, as we argued in April 2026.” CLSA also expects the Macau gaming sector will see its margin on earnings before interest, taxation, depreciation and amortisation (EBITDA) “under pressure” in 2027 as gaming companies’ operating expenses would in likelihood grow at a faster pace than gaming revenue. “Macau gaming’s second-quarter 2026 results are testament to mounting headwinds against margins, with aggregate property-level operating expense (ex-depreciation and amortisation) rising 2 percent year-on-year compared with a 0.1 percent year-on-year decline in the sector’s gross gaming revenue,” Mr Kiang wrote. The Macau gaming sector’s reported EBITDA fell 10.7 percent year-on-year to nearly US$1.81 billion in the second quarter this year, the brokerage noted. “In our view, opex pressure does not dissipate easily since there has been upward pressure on staff costs,” CLSA noted. The brokerage added: “There has been a consistent wage hike for non-managerial staff of at least 2.5 percent each year announced in 2024, 2025 and 2026. “These salary adjustments are highly similar across the board,” among the city’s six operators he added. “This also suggests EBITDA margin expansion is highly unlikely if GGR grows at only low single digits,” stated the analyst.