Macau casino companies’ combined first-quarter earnings before tax and other expenses are likely to register sequential growth that amounts to 5 percent on average, says a report from banking group Morgan Stanley.
First-quarter earnings reporting season for Macau’s six gaming operators is expected to start in late April and extend into early May.
The institution said it anticipated average growth in earnings before interest, taxation, depreciation and amortisation (EBITDA) of “5 percent quarter-on-quarter,” similar to the scenario in the fourth quarter 2016.
Morgan Stanley added it forecast “positive estimate revisions” for Melco Resorts and Entertainment Ltd – formerly known as Melco Crown Entertainment Ltd – and for Wynn Macau Ltd; and “relatively weaker first-quarter results” for Sands China Ltd and MGM China Holdings Ltd.
Analysts Praveen Choudhary, Alex Poon and Thomas Allen noted: “We expect Wynn [Macau Ltd] to report the strongest property EBITDA growth, 20 percent quarter-on-quarter, to US$271 million: this is driven by Wynn Palace with US$113 million (US$77 million in fourth quarter 2016), while peninsula [Wynn Macau] stopped declining and grew 6 percent quarter-on-quarter, to US$158 million (fourth quarter 2016: -1 percent quarter-on-quarter).”
A Friday report from brokerage Sanford C. Bernstein Ltd said an uptick in Macau casino earnings in recent months had been supported by a recovery in the VIP segment, linked to “accelerating capital outflow from China”.
But analysts Vitaly Umansky, Zhen Gong and Yang Xie noted: “China policy is tightening with the aim of reducing outflows, and, as a result, moving money out of the country will become more difficult creating headwind on VIP (and upper end premium mass).”
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Adjusted EBITDA reported by Asian casino operator Melco Resorts and Entertainment for the fourth quarter of 2020