Casino operator Melco Resorts and Entertainment Ltd posted a net loss of US$233.2 million for the three months to September 30, compared to a loss of US$185.7 million for the second quarter of 2021. But the result was an improvement on the US$331.6-million loss recorded a year earlier, according to a Tuesday filing to Nasdaq.
The firm meanwhile confirmed it would no longer be vying for a casino resort in Japan. “We have discontinued our pursuit of an integrated resort development in Japan and will close our offices there in the coming months,” the release quoted company chairman and chief executive Lawrence Ho Yau Lung as saying.
Melco Resorts runs gaming operations in Macau; in Manila, in the Philippines; and in the Republic of Cyprus.
The company’s aggregate operating revenues for the third quarter of 2021 were US$446.4 million, more than double the result achieved in the prior-year period. Such revenue was however down 21.2 percent sequentially.
Melco Resorts reported group-wide adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$31.9 million in the third quarter of 2021, a decline of 59.7 percent from the previous quarter, but an improvement on the negative adjusted property EBITDA of US$76.7 million in the prior-year period.
“In Macau, Melco Resorts’ operations have been impacted by on-and-off travel restrictions and quarantine requirements as imposed by the governments of Macau, Hong Kong, and mainland China in response to isolated [Covid-19] cases,” said the firm. It made reference in particular to stricter Covid-19-related restrictions iimplemented in Macau in early August and September following a number of new infection cases in the city.
Commenting on Melco Resorts’ latest set of results, brokerage Sanford C. Bernstein Ltd noted that “despite third quarter’s Covid impact on Macau visitation and temporary closure of its Philippine casino, the casino firm “managed to achieve EBITDA positive in all its operating regions.”
In the Philippines, City of Dreams Manilla operated at limited capacity since the beginning of the quarter until August 5, when Manila was put into lockdown due to a surge in Covid-19 cases. On September 17, the property reopened operations with capacity limited at 50 percent, said Melco Resorts.
In their note, Sanford Bernstein analysts Vitaly Umansky, Louis Li and Kelsey Zhu said that the casino operator’s Macau gross gaming revenue (GGR) was US$402 million, up 170 percent year-on-year, but down 28 percent sequentially. Melco Resorts’ GGR market share in the third quarter was 17.1 percent versus 17.6 percent in the prior three months, they added.
Tuesday’s filing quoted Melco Resorts’ Mr Ho as saying the firm was continuing to “enforce strong cost control discipline in respect to both operating expenses and capital expenditures” to preserve cash and liquidity amid the challenges linked to the Covid-19 pandemic.
The executive added that works were ongoing for the second phase of Melco Resorts’ majority-owned Studio City casino resort (pictured in a file photo) in Macau. “The construction of Studio City Phase 2 is progressing on track for completion before December 27, 2022,” he said.
The firm is hosting on Monday (November 15) a “topping out ceremony” for the second phase of the casino property.
Mr Ho also confirmed that the development of City of Dreams Mediterranean in Cyprus was “on track” to open in the second half of 2022.
Melco Resorts’ capital expenditures for the third quarter were US$221.3 million, primarily related to the construction projects at Studio City Phase 2 and City of Dreams Mediterranean.
City of Dreams Manila also commenced operating online gaming in the third quarter, the firm said. That included live-dealer table games from August 10 and slot machines from September 15, it stated. “Such online gaming offerings are only available to registered patrons of City of Dreams Manila inside the Philippines,” according to Melco Resorts’ filing.
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"There is still no clarity about when border easing for Macau will occur. In the end these changes are needed to see a rebound for Macau business"
Vitaly Umansky, Louis Li and Shirley Yang
Analysts at brokerage Sanford C. Bernstein