GGRAsia – Melco EBITDA close to pre-pandemic level by 2024: S&P

Melco EBITDA close to pre-pandemic level by 2024: S&P

Aug 04, 2023 Newsdesk Latest News, Macau, Top of the deck

S&P Global Ratings says it forecasts casino operator Melco Resorts & Entertainment Ltd to achieve this year, adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) of “about 70 percent of 2019 levels”, the trading year immediately preceding the pandemic.

Such EBITDA would in likelihood increase to “close to 100 percent in 2024,” of pre-Covid level, stated the institution in a Wednesday bulletin.

Melco Resorts reported second-quarter adjusted property EBITDA of US$267.3 million, 40.1-percent higher sequentially. It compared with “about 60 percent in the second quarter” of 2019, according to the ratings agency.

Nevertheless, S&P Global said it was trimming its 2023 and 2024 EBITDA forecasts for Melco Resorts “by 4 percent to 5 percent, mainly to reflect softness in Philippines VIP GGR and revised cost assumptions”.

Melco Resorts is “benefitting from a strong recovery in Macau’s mass market,” as well as “incremental contributions” from the opening in April of Phase 2 of its majority-owned Studio City casino resort.

The casino firm’s operating revenues for the three months to June 30 were US$947.9 million, up 32.3 percent from the first quarter this year.

Some factors contributing to the improved performance during the period were the opening in April 2023 of “Studio City Phase 2’s Epic Tower and indoor waterpark”, as well as the “launch of residency concerts at Studio City in the same month,” said Melco Resorts in its earnings result filing.

S&P Global noted that Melco Resorts’ second-quarter mass-market gross gaming revenue in Macau “came in at 84 percent of 2019 levels, roughly in line with the market”.

“We continue to expect Melco to outperform the market in the next few quarters, on the back of incremental contributions from Studio City Phase 2,” said the ratings agency.

“The project was partially opened in early April and is scheduled to add another approximately 560 rooms with the opening of the W Macau in September,” it added.

Melco Resorts’ chairman and chief executive, Lawrence Ho Yau Lung, said on a conference call with analysts this week that the firm was able to gain “some meaningful share” in the Macau gaming market in the second quarter. “I think on mass drop and on premium direct growth, we are at over 100 percent of second-quarter 2019 level,” he stated.