Banking group Morgan Stanley says it expects Macau casino property earnings before interest, tax, depreciation and amortisation (EBITDA) to rise 46 percent collectively in the second quarter of this year compared to the first three months.
The institution said it expected Macau’s gaming industry second-quarter EBITDA to be just below US$1.65 billion, reaching circa 69 percent of 2019 levels. That compared to nearly US$1.15-billion EBITDA in the first three months of 2023, according to a Sunday note.
“We expect second quarter to be the first quarter where mass revenue and thus EBITDA are closer to pre-Covid levels (mass revenue at circa 90 percent of 2019),” wrote analysts Praveen Choudhary, Gareth Leung, and Stephen Grambling.
“A few major concerts [in Macau] helped in the second quarter, which we expect will continue in third-quarter 2023,” they added. “Visitation in second-quarter 2023 was only at 60 percent of 2019 levels, and more than circa 5 percent of rooms have been offline, suggesting upside to third quarter [and] fourth quarter estimates.”
Mass revenue is expected to be up 29 percent quarter-on-quarter, to 89 percent of pre-Covid levels, or just below US$4.79 billion in the second quarter, stated Morgan Stanley.
“Further upside to mass revenue could come from recovery in package tours, visitation from provinces further away from Macau and improving capacity for ferry and air travel,” said the analysts.
They added: “We forecast industry mass revenue to reach 115 percent and 125 percent of 2019 level in 2024 and 2025.”
The institution also said it believed that Wynn Macau Ltd, Melco Resorts & Entertainment Ltd, and SJM Holdings Ltd to “have gained revenue market share” in the three months to June.
Wynn Macau Ltd might have been “helped by the completion of the renovation in its peninsula property and better premium offerings,” stated the analysts.
SJM Holdings was helped by the ramp-up of Grand Lisboa Palace in Cotai. “We expect Grand Lisboa Palace’s second-quarter 2023 mass-market share to track at about 2 percent, from 1percent in first-quarter 2023,” stated the Morgan Stanley team. “It may have to get to circa 3percent mass-market share for EBITDA to breakeven, we estimate,” the analysts added.
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