Banking group Morgan Stanley says it expects Macau casino industry corporate earnings before interest, taxation, depreciation and amortisation (EBITDA) to rise 5 percent collectively in the first quarter of this year compared to the final three months of 2023.
The institution said it expected Macau’s gaming industry first-quarter EBITDA to be just under US$1.95 billion, reaching circa 81 percent of 2019 levels. That compared to nearly US$1.85-billion corporate EBITDA in the fourth quarter of 2023, according to a Wednesday note.
Nonetheless, such EBITDA growth would “come below” first-quarter gross gaming revenue (GGR) “growth of 6 percent quarter-on-quarter, suggesting operating deleverage,” wrote analysts Praveen Choudhary, Gareth Leung, and Stephen Grambling.
Macau’s GGR for the first quarter of 2024 stood at about MOP57.33 billion (US$7.11 billion), up 5.9 percent from the MOP54.11 billion recorded in the final quarter of 2023.
“We think this quarter will see smaller operating leverage benefits due to wage increase, and some companies increasing promotions to attract customers,” said the Morgan Stanley team. “We also think grind mass could have recovered better this quarter.”
In terms of Macau industry property EBITDA, the figure could increase 6.0 percent sequentially, to about US$2.10 billion in the three months to March 31, suggested the institution.
Macau operators MGM China Holdings Ltd and Wynn Macau Ltd “should beat consensus expectations,” said Morgan Stanley. SJM Holdings Ltd “will benefit from better EBITDA growth, driven by Grand Lisboa Palace,” it added.
In early March, management of SJM Holdings mentioned having “promising results” so far this year following the introduction in late December of a new “centralised platform” to manage its self-promoted properties and reposition existing satellite casinos.
The company’s Grand Lisboa Palace property in Cotai reported its “first quarter of profitability” in the final three months of 2023.
SJM Holdings’ management was cited saying that it expects the new platform would “improve company-wide margins by 2 percent to 5 percent”.
