Macau’s six casino operators have “learned their lessons” from a “junket commission price war back in 2008-09,” says a report from Citigroup, referring to the operators’ previous efforts to attract junket-sponsored VIP players to their respective properties.
The institution’s analysts George Choi and Ryan Cheung added, referring to recent industry commentary about possible rises in the cost of doing business, amid competition for premium players in a market now largely shorn of junkets: “We do not see any out-of-proportion irrational market-buying behaviour by any operators.”
They further stated, referring to earnings before interest, taxation, depreciation and amortisation in the fourth quarter of 2023: “On our estimates, Macau’s industry EBITDA improved to US$1,951 million, up 6 percent quarter-on-quarter.”
They added: “We anticipate industry EBITDA margin in fourth-quarter 2023” to have been “largely unchanged quarter-on-quarter, at circa 28.5 percent.”
Mr Choi and Mr Cheung also observed: “At an individual operator level, we believe the quarter-on-quarter volatility in EBITDA margins has more to do with the operator’s market share change for the quarter, rather than the amount spent on player reinvestments.”
Goldman Sachs (Asia) LLC, had said in a note, citing recent conversations with management at Macau operator Galaxy Entertainment Group Ltd, that it had experienced some fourth-quarter loss of market share in gross gaming revenue (GGR). That institution noted that the operator was working on a revamp of its main gaming areas at its flagship Galaxy Macau resort on Cotai, which it thought should boost the firm’s market performance.
Citigroup said in its memo that its preview of fourth-quarter 2023 earnings for the sector, due to be reported soon, indicated “Galaxy and Sands [China Ltd] have lost [respectively] market share to the smaller operators”.
It added: “Even though we believe most of the market share changes in the fourth quarter were driven by luck, these short-term market-share gains will likely translate into more resilient EBITDA margins for MGM China [Holdings Ltd], Melco [Resorts & Entertainment Ltd], Wynn Macau [Ltd], and SJM [Holdings Ltd].”
