Macau ops all likely had negative 2Q EBITDA: JP Morgan

Jul 04, 2022 Newsdesk Latest News, Macau, Top of the deck  

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It is unlikely any of Macau’s six casino operators have managed to generate positive earnings before interest, taxation, depreciation and amortisation (EBITDA) in the second quarter, roiled by factors led by a whole month – June – seeing casino gross gaming revenue (GGR) down 62 percent year-on-year, says a note from JP Morgan Securities (Asia Pacific) Ltd.

June’s poor performance coincided with a fresh local outbreak of Covid-19 – the worst since the pandemic crisis began in early 2020.

Total GGR in the second quarter had been MOP8.5 billion (US$1.05 billion) or about MOP91 million per day, noted the institution.

This was “a meagre 12 percent of the pre-Covid level,” wrote analysts DS Kim and Livy Lyu.

“At this level, none of operators would be able to generate positive EBITDA… not even Galaxy,” they added, referring to Galaxy Entertainment Group Ltd.

Following June’s performance, Carlo Santarelli of Deutsche Bank Securities Inc said in in a Friday note that the institution was updating its third-quarter forecast for Macau casino revenue. It now expected third-quarter GGR of US$1.62 billion, down 31 percent year-on-year, compared to a previous estimate of US$2.34 billion.

Brokerage Sanford C. Bernstein Ltd said in a Friday note that – coinciding with the Macau government alert on June 19 about the latest Covid-19 outbreak – average daily volume of travel in and out of Macau for June 17 to 29 was “about 9,400”, i.e., down 77 percent week-on-week compared to 41,200 movements in the period June 9 to 15.

Bernstein analysts Vitaly Umansky, Louis Li and Shirley Yang added: “While the timing of full travel resumption into Macau from Hong Kong and mainland China remains unclear, we see several steps to reopening travel occurring during the summer and autumn of 2022, which should improve mass[-market GGR] recovery in the second half, 2022.”

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