GGRAsia – Four of six Macau ops could pursue Thai market: CLSA

Four of six Macau ops could pursue Thai market: CLSA

Jul 29, 2024 Newsdesk Latest News, Rest of Asia, Top of the deck

Four out of Macau’s six casino concessionaires “have expressed interest in investing in Thailand” against the backdrop of that country’s mulling of casino legalisation, says a Monday report from brokerage CLSA Ltd.

The institution thinks the annual gross gaming revenue (GGR) value of a Thai casino industry – mostly driven by foreign players – could be US$8.5 billion, up to as much as US$30.8 billion, though CLSA says its “base case is US$15.1 billion”.

“Among Macau gaming concessionaires, we believe Galaxy [Entertainment Group Ltd], Las Vegas Sands [Corp], MGM Resorts [International] and Wynn Resorts [Ltd] have expressed interest in investing in Thailand,” stated the report, referring to the parent groups of Macau licensees.

“In contrast, Melco [Resorts & Entertainment Ltd] and SJM [Holdings Ltd] are less likely to show interest given their balance sheet constraints,” added Hong Kong-based CLSA analysts Jeffrey Kiang and Leo Pan; along with their colleague Naphat Chantaraserekul, head of Thailand research.

Las Vegas Sands, parent of Macau operator Sands China Ltd, already has Asian-region diversification via its Marina Bay Sands resort in Singapore. MGM Resorts, parent of Macau licensee MGM China Holdings Ltd, is investing in the MGM Osaka casino resort in Japan. Wynn Resorts, controller of Macau concessionaire Wynn Macau Ltd, is building Wynn Al Marjan Island, in Ras Al Khaimah, in the United Arab Emirates.

Galaxy Entertainment, which – like the other five Macau operators – had previously explored the Japan market, was according to CLSA “still looking for overseas expansion; supported by a cash-bloated balance sheet”.

The analysts’ report stated: “Burdened by mounting debt from Covid[-19], Thailand is in dire need of an economic revival.

“In a decisive move, lawmakers have voted to legalise gaming, bringing the opening of land-based casinos closer. Targeting foreign visitors as the primary players, the proposed gaming licences would be valid for 20 years, with a 17 percent tax rate. Prospective licence holders need to invest US$2.7 billion at minimum,” added CLSA.

With what the brokerage termed “overwhelming support” from the country’s parliament in a March vote on a steering committee report, “we expect such process to last for one to two years, followed by another three to four years of construction,” suggesting “the first entertainment complex could come online in 2029 at the earliest”.

A 17 percent gaming tax on circa US$15.1 billion GGR, would equate to US$2.6 billion from gaming tax each year, said CLSA.

It suggested property-level margin on earnings before interest, taxation, depreciation and amortisation (EBITDA) could exceed 40 percent.

“With a comparable gaming tax rate… [to] Singapore and the Philippines, Thailand’s entertainment complexes are well positioned to deliver similar property EBITDA margin,” stated CLSA.

According to industry observers, five possible locations had so far been mentioned for such resorts. Two were in the capital, Bangkok (pictured), and there had been mention of one each in: the country’s Eastern Economic Corridor; Chiang Mai; and Phuket.

The size and scope of any casino industry developed in Thailand might fall short of its government’s expectations, according to some commentators at the Global Gaming Expo (G2E) Asia 2024 casino industry trade show and conference in Macau.