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Macau op 2Q EBITDA loss as much as US$544mln: MS

Jul 08, 2022 Newsdesk Latest News, Macau, Top of the deck  


Macau op 2Q EBITDA loss as much as US$544mln: MS

The combined second-quarter performance of Macau’s six casino operators in terms of loss before interest, taxation, depreciation and amortisation (LBITDA) could be as high as the equivalent of US$544 million, compared to a consensus view of a US$99-million such loss, says a Wednesday note from Morgan Stanley Asia Ltd.

That would be “the third-lowest quarter since 2020,” wrote analysts Praveen Choudhary and Gareth Leung.

A recent note from JP Morgan Securities (Asia Pacific) Ltd said it did not expect any Macau operator to have recorded positive second-quarter EBITDA.

The Macau industry would “burn US$1.5 billion of cash” in the second quarter, including development capital, compared to combined cash burn of US$1.0 billion in the first quarter, added the Morgan Stanley team.

The hardest hit Macau operator in the three months to June 30 – which encompasses a near-standstill in Macau tourism since a Covid-19 outbreak starting on June 19 – was likely to be SJM Holdings Ltd, with a nearly-HKD1.05-billion (US$133.5-million) LBITDA.

Macau had recorded a total of 1,303 Covid-19 infections in the current outbreak, as of midnight on Thursday, with 88 newly-confirmed cases in 24 hours.

The Morgan Stanley analysts noted that in a theoretical future quarter of zero revenue – there is no exit in sight so far on the current Macau outbreak – “industry cash burn could be as high as US$2.2 billion”.

Nonetheless, the Morgan Stanley analysts said they saw “investor interest in this industry rising,” after the mainland China authorities’ recent announcement of some easing in relation to quarantine conditions for inbound travel to the mainland.

Nonetheless, currently anyone eligible to travel from Macau into neighbouring Zhuhai in the mainland’s Guangdong province, is required to undergo a seven-day quarantine, a factor seen by industry observers as a major disincentive for mainlanders to consider visiting Macau.


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