China International Capital Corporation Limited (CICC) has lowered its EBITDA forecasts for Macau gaming operators for 2025 and 2026, expecting a 9% year-on-year growth in industry EBITDA in 2025 and a 7% increase in 2026, only recovering to 89% and 96% of the 2019 levels, respectively. Despite maintaining a positive outlook on revenue recovery and slightly raising the 2026 total gaming revenue (GGR) forecast, it noted that the industry is facing a situation of "revenue recovery but profit margin pressure." The pressure on profit margins mainly stems from increased market competition leading to higher player incentives and reinvestment rates, with the industry EBITDA margin dropping to 23.44% in Q3 2025. Mass market revenue remains the main growth driver, expected to increase by 7% and 6% in 2025 and 2026, respectively, reaching 119% and 126% of the 2019 levels, while VIP revenue continues to be weak.
Profit Forecast Adjustment and Industry Trends
CICC has lowered its EBITDA forecasts for Macau gaming operators for 2025 and 2026, expecting a 9% year-on-year growth in 2025 and a 7% increase in 2026, only recovering to 89% and 96% of the 2019 levels. The company maintains a positive outlook on revenue recovery but notes that the industry is in a phase of "revenue recovery but profit margin pressure."
This adjustment reflects CICC's cautious stance on the industry's short-term profitability, although revenue is expected to continue improving.
Total Gaming Revenue Forecast and Structural Changes
CICC expects Macau's total gaming revenue to grow by 9% year-on-year in 2025 and by 5% in 2026, recovering to 84% and 88% of the pre-pandemic levels. Mass market revenue remains the main engine of structural growth, expected to increase by 7% and 6% in 2025 and 2026, respectively, reaching 119% and 126% of the 2019 levels.
VIP revenue continues to be weak, expected to grow by 19% in 2025 and shrink by 5% in 2026, only equivalent to 29% and 28% of the 2019 levels, indicating a fundamental change in business structure.
Profit Margin Pressure and Rising Costs
CICC warns that EBITDA performance will lag behind the total gaming revenue recovery, mainly due to intensified market competition driving up player incentives and reinvestment rates. The industry EBITDA margin in Q3 2025 is 23.44%, lower than the same period last year at 24.12% and the previous quarter at 23.94%.
The company points out that the industry faces "downside risks," with marketing costs and promotional expenditures climbing across the board, and new capacity additions and increased competitive pressure further compressing profit margins.
Current Performance and Recovery Progress
Industry EBITDA is expected to reach $2.1 billion in Q3 2025, a 9% year-on-year increase and a 2% quarter-on-quarter increase, only recovering to 91% of the same period in 2019. Although revenue is steadily growing, profit margin pressure is causing a slower-than-expected recovery in profitability.
CICC believes that this situation of "revenue growth but profit pressure" may continue for a while until the market competition landscape stabilizes.
Market Advantages and Positive Factors
The Macau market still has structural advantages, including rebounds in tourism and high-end consumption. International tourist numbers from January to August 2025 increased by 14% year-on-year, benefiting from the weakening of the Hong Kong dollar and the "virtual asset wealth effect," boosting high-end players' discretionary spending.
Cryptocurrency-driven capital flows also support high-end customer consumption, helping to sustain demand for high-end business.
Non-Gaming Business and Diversification Strategy
Non-gaming entertainment plays a key role in maintaining tourist growth. Integrated resort operators have "significantly upgraded their event strategies" by attracting repeat customers through concerts, sports events, and international entertainment activities, achieving a diversified customer base.
These initiatives help create new tourist demand while deepening interaction with the mass market, reducing reliance on gaming revenue.
Competitive Environment and Regional Challenges
CICC warns of risks such as "slower-than-expected recovery of Macau's total gaming revenue" and "rising competitive pressure in Asia." Markets like Singapore and the Philippines continue to expand their integrated resort businesses, diverting some regional clientele.
Intensified regional competition forces Macau operators to increase investments to enhance competitiveness, further compressing profit margins.
Industry Outlook and Risk Factors
Despite facing short-term challenges, CICC remains optimistic about the medium and long-term prospects of the Macau gaming market. Structural growth in mass market business, diversification of non-gaming business, and recovery of high-end consumption support the industry.
Main risks include macroeconomic fluctuations, intensified regional competition, and changes in the regulatory environment, which may affect the recovery process and profitability.
Investment Recommendations and Market Positioning
CICC advises investors to focus on operators with strong mass market capabilities, diversified non-gaming business, and cost control abilities. Profit margin pressure may prompt industry consolidation and efficiency improvements, with leading companies likely to gain a larger market share.
The company maintains an optimistic view on the long-term development prospects of the industry, believing that the current adjustment period provides opportunities to position in quality targets.
Policy Environment and Regulatory Impact
The Macau gaming regulatory environment remains stable, with the industry operating more regulated after the implementation of the new gaming law. Government support for the development of non-gaming business helps sustain industry development and enhance competitiveness.
The clarity of the regulatory framework provides operators with long-term planning certainty, supporting the healthy development of the industry.
