Macau market cap to double by 2022

14 November 2017

Macau’s market capitalization could double by 2022, with gross gaming revenue (GGR) growing at a CAGR of 10% to reach US$53 billion, according to Morgan Stanley analysts.

In a report titled Macau 2022 – Power of Compounding, the financial services firm suggests that Macau’s gaming industry has started a “new upcycle” driven by the impending completion of vital new infrastructure developments and rising spending growth, while the completion of new Cotai developments will reduce capex and ensure greater returns for investors. 

“We do a deep dive analysis of all the infrastructure developments, supply additions and Chinese spending power to conclude that Macau GGR could reach US$53 billion in 2022, growing at a 10% CAGR in our base case,” explain Morgan Stanley’s team of analysts. “This is driven by 6% visitation and 5% spending growth.

“While Macau sometimes trades on weekly GGR, investors have been better served looking at much longer term themes and trends. Usually, the stock cycle lasts three to five years and we think the current one has just started.

 “We believe the sector market cap could grow to US$230 billion – double the current value.”