Analysts Praveen K Choudhary, Gareth Leung, Stephen W Grambling, and Nicholas P DeValeria, explained in a recent note that achieving an industry EBITDA fully comparable to the 2019 level would require mass casino revenue to reach at least 120 per cent of the pre-pandemic level.

Morgan Stanley’s report highlights several factors contributing to this phenomenon, including higher gaming taxes, a decline in VIP segment revenue by over 75 per cent compared to the 2019 level, and a slower recovery when it comes to slot machines.

Contributions from slot machines – the highest-margin gaming product – were running at 80 per cent of the pre-pandemic level only during the third quarter of 2023.

The investment bank has revised its industry EBITDA estimates for 2023 and 2024, lowering them by 5 per cent and 2 per cent, respectively.

In terms of stock performance, Macau stocks have been in line with the Hang Seng Index and have outperformed several Chinese consumer stocks, the brokerage pointed out.

In the near term, stock prices could be range-bound, as September historically exhibits weaker demand following robust leisure and travel activity in July and August.

However, the analysts emphasised that they expected a robust October holiday period and the traditionally strong fourth quarter to drive revenue and EBITDA growth, surpassing a quarter-on-quarter increase of 10 percent.

In the financial year-to-date, the gaming sector has successfully reduced its net debt by US$1.7 billion (MOP13.7 billion), with the Morgan Stanley estimate suggesting that it will take approximately three years to fully recover to pre-Covid net debt levels.