Jul 18, 2024 Newsdesk Latest News, Macau, Top of the deck  
JP Morgan Securities LLC has lowered its estimate for property-level earnings before interest, taxation, depreciation and amortisation (EBITDA) for Melco Resorts & Entertainment Ltd in the second quarter of 2024.
The institution now expects Melco Resorts’ property level EBITDA to be US$313 million, down from its prior forecast oft US$336 million. Of the latest quarterly estimate of US$313 million in group-wide property level EBITDA, JP Morgan expects US$260 million to be generated by the casino firm’s Macau operations.
In the Macau market, Melco Resorts operates the casino resorts City of Dreams, Studio City and Altira, as well as the slot halls under the “Mocha Club” brand.
The company also runs a property in the Philippine capital Manila, and gaming venues on the Mediterranean island of Cyprus. The group announced in April an investment in a casino resort in Colombo, the Sri Lankan capital, with gaming operations there expected to “commence in mid-2025”.
“While Melco likely grew second-quarter 2024 table gross gaming revenues (GGR) market share quarter-over-quarter – to circa 15 percent from circa 14 percent -, this result is below our prior GGR forecast and most likely came with higher premium mass promotional/reinvestment activity resulting in lower net revenue conversion and weaker EBITDA,” wrote analysts Joseph Greff, Ryan Lambert and Samuel Nielsen in a Thursday memo.
They added: “We think most of the U.S.-centric Macau operators will report mostly uninspiring Macau second-quarter 2024 EBITDA results, save MGM.”
The casino operator reported first-quarter adjusted property EBITDA of US$298.8 million, down 1.5 percent sequentially. That was on operating revenues that rose by 1.8 percent quarter-on-quarter, to US$1.11 billion.
For full-year 2024, JP Morgan now expects Melco Resorts to report group-wide property EBITDA of about US$1.29 billion, down 5.1 percent from its previous estimate. For Melco Resorts’ operations in Macau, JP Morgan now forecasts property EBITDA level of US$1.08 billion this year, down 3.0 percent from a previous prediction.
The brokerage expects the casino firm to generate group-wide property EBITDA of US$1.36 billion next year, down 4.9 percent from its previous estimate. The Macau property-level EBITDA is now expected to be US$1.14 billion in 2025, down 4.5 percent from a previous estimate.
“We previously thought Melco’s Macau EBITDA trajectory would be more robust given easy year-on-year comparisons and new property level management that would generate stronger near-term results, and granted it’s still super early as these changes are less than six months old, but we still see Melco as a prove-it-on-the results stock, in addition to fighting the current negative investor sentiment towards Macau stocks, driven by macro and geopolitical concerns,” stated the JP Morgan team.
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