Apr 25, 2023 Newsdesk Latest News, Macau, Top of the deck
Macau could achieve a daily average rate of casino gross gaming revenue (GGR) amounting to as much as MOP750 million (US$92.8 million) during the first three days of the Chinese holiday period straddling the end of April and the start of May, says a Monday memo from Credit Suisse AG.
Analysts Kenneth Fong and Sardonna Fong cited “channel checks” for their GGR forecast for April 29 to May 1, the latter known as Labour Day. China’s State Council has designated April 29 to May 3 inclusive, as a holiday on the mainland, a period sometimes referred to by the investment community as “May Golden Week”.
Credit Suisse said it thought that first-quarter market share gains previously flagged by the investment community for MGM China Holdings Ltd – one of Macau’s six gaming concessionaires – were “sustainable”.
The bank did though mention, citing conversations with chief financial officers at some Macau operators, that “they generally believe the industry needs at least 120 percent to 130 percent” recovery in mass-market GGR relative to the pre-pandemic trading year of 2019, in order to recover to financial-year 2019 levels of earnings before interest, taxation, depreciation and amortisation (EBITDA).
Credit Suisse cited as factors likely to affect EBITDA margin over the next few years, “higher mass-market reinvestment rate” in players due to industry “competition” for customers; and “lower-than-expected benefit of cost saving”.
The latter was due to factors including “mismatch in labour” supply and demand within the industry, as “casinos lack non-gaming labour, while having excess gaming” workers.
According to Monday’s note, as Macau’s industry daily GGR improved by about “10 percent”, from MOP370 million in January and February, to around MOP411 million in Macau, “sector EBITDA has been improving sequentially”.
The bank added however that as March headline GGR improvement was “mainly driven by VIP and higher luck factor, mass daily GGR – a better reflection of sector profitability – was up around 4 percent compared with January and February level.”
“So, the underlying EBITDA benefit would be more muted than the headline GGR suggested,” wrote the Credit Suisse team. “So far, based on our channel check, April mass GGR continues to be sequentially – plus 4 percent to 5 percent – stronger than that of March.”
Macau’s casino GGR was up 246.9 percent year-on-year in March, to just under MOP12.74 billion. The March result was the best monthly performance since January 2020 – prior to the onset of the pandemic alert.
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