Banking group Morgan Stanley says it is raising Macau gaming industry estimates “again”, after monthly gross gaming revenue (GGR) came “stronger than consensus expectations for two consecutive months”.
“We believe visitation recovery – April was 64 percent of the pre-Covid level – will continue to drive revenue recovery,” wrote analysts Praveen Choudhary, Gareth Leung, and Stephen Grambling in a Wednesday note.
Macau’s casino GGR reached MOP14.72 billion (US$1.83 billion) in April, up 15.6 percent from MOP12.74 billion in March. The April tally was up 449.9 percent from the prior-year period, according to official data.
The April result was the best monthly performance since January 2020 – prior to the onset of the pandemic alert. According to Morgan Stanley’s estimates, mass-market GGR in April “was circa 100 percent of the pre-Covid level”.
“We now expect 2023 mass GGR of US$19.9 billion (88 percent of 2019) and 2024 mass GGR of US$25.7 billion (114 percent of 2024),” stated the Morgan Stanley team.
Industry-wide, including the VIP segment, the institution expects GGR in the Macau market to reach 63 percent and 80 percent of 2019 levels in respectively 2023 and 2024.
The bank also said it was raising estimates for Macau casino operators Sands China Ltd and MGM China Holdings Ltd, following the announcement of their respective first-quarter earnings results.
Sands China achieved adjusted property earnings before interest, taxation, depreciation, and amortisation (EBITDA) of US$398 million in the first quarter of 2023. First-quarter adjusted EBITDA at MGM China Holdings stood at HKD1.41 billion (US$180.0 million).
“We increase Sands 2023 EBITDA [estimate] by 23 percent to reflect its better-than-expected first-quarter 2023 results, higher mass market-share assumptions, and higher industry estimates,” said the Morgan Stanley team. Such EBITDA would be just under US$2.30 billion, according to the bank’s estimates.
Morgan Stanley also increased MGM China’s 2023 EBITDA estimate by 23 percent, to just above HKD5.96 billion.
It stated that it now assumes that both Sands China and MGM China would “only resume dividends in 2025”.
