Citigroup: Macau's high-end gaming mid-market business becomes a major growth driver this year

Citigroup's research report indicates that despite the economic uncertainties this year, Macau's total gaming revenue so far shows that wealthy players' enthusiasm for gambling and willingness to spend are still on the rise, which is also confirmed by Citigroup's survey data over the past twelve months.

Citigroup stated that this year, its gaming team observed approximately 8,000 high-end mid-tier players, with a total betting amount of HKD 191.44 million, representing a year-on-year growth of 12%. The growth momentum comes from a 6% year-on-year increase in the number of high-end mid-tier players and a 6% year-on-year increase in the average betting amount per person to HKD 24,018, meaning both the quantity and quality of players have improved.

Citigroup also pointed out that Macau provides wealthy consumers from mainland China with a willing-to-spend "all-around experience" (concerts, hotel suites, and new types of gambling), believing that the growth of Macau's total gaming revenue will continue.

Citigroup noted that the overall average minimum betting amount for mid-tier baccarat in Macau is HKD 2,058. Although it has increased by 4% year-on-year, it has decreased by 3% month-on-month. The monthly decline trend is believed to be related to the competition among six casino operators for the market share of total gaming revenue released due to the recent closure of satellite casinos.

Since October this year, Citigroup has observed that several casinos have opened new areas with significantly reduced minimum betting amounts to HKD 300. These areas were quite crowded during Citigroup's visit, indicating that players from satellite casinos are still trying out these new products in the market (and it is expected that Sands China (01928.HK) will soon join the competition). It remains to be seen how much market share Melco Resorts & Entertainment (00880.HK) can maintain.

For Citigroup's ratings and target prices on Macau gaming stocks, please refer to another table