GGRAsia – Melco Resorts profit recovery continues in 3Q

Melco Resorts profit recovery continues in 3Q

Nov 06, 2024 Newsdesk Latest News, Macau, Philippines, Top of the deck

Global casino resort developer and operator Melco Resorts & Entertainment Ltd swung back to a profit of nearly US$27.3 million in the three months to September 30, compared to a US$16.3-million loss in the third quarter 2023.

That was on total operating revenues that grew by 15.5 percent to nearly US$1.18 billion, compared to the prior-year period. The company gave the information in a Tuesday announcement via the United States, where the group lists its American depository shares.

The firm’s casino revenues rose 16.3 percent year-on-year, to just under US$944.4 million.

Group operating expenses rose 12.4 percent year-on-year, to just under US$1.04 billion.

Total debt was US$7.17 billion at the end of the reporting quarter, down circa US$57 million on the prior quarter, “primarily as a result of the repurchases of the 6.00 percent senior notes due 2025 issued by Studio City Finance Ltd,” said the group.

Available liquidity, including cash and undrawn revolving credit facilities as of September 30, was approximately US$3 billion.

Melco Resorts runs casino complexes in Macau, as well as City of Dreams Manila in the Philippines, and City of Dreams Mediterranean in the Republic of Cyprus. In April it was announced the group would be running a casino at a Colombo, Sri Lanka, resort project.

The group’s third-quarter adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) were US$322.5 million, up 14.9 percent year-on-year.

Mass marketing initiatives

Managment said during the quarter’s earnings call that the group was looking toward post-pandemic resumption of dividend payments from the second half of 2025.

Vitaly Umansky, an analyst at Seaport Research Partners, said in a Tuesday note: “While Melco [Resorts] lost share in Macau, the share loss was better than expected and costs were kept in check leading to the EBITDA beat.”

He added: “There was some hold benefit, but even with this, the numbers were better than estimated.”

Lawrence Ho Yau Lung, Melco Resorts’ chairman and chief executive, had been cited saying in prepared remarks about the trading in the three months to September 30: “Our initiatives to activate areas throughout our properties and drive visitation are coming together.”

He added, referring latterly to two key Macau properties: “We launched a revamped loyalty programme, opened a new Signature Club premium slot area at City of Dreams, and a highly themed slot area called the Dragon Zone at Studio City, in partnership with Aristocrat Gaming.”

The CEO further stated: “We are enhancing accessibility into City of Dreams with a new light tunnel entrance which is complemented by live performances.

“We expect to continue to unveil new and exciting projects to support the ongoing growth in Macau.”

Mr Ho said that in the Manila market – where City of Dreams Manila is one of a number of large-scale casino resorts in the Entertainment City zone – “despite added competition, City of Dreams’ property EBITDA increased sequentially”.

In the Mediterranean market, “City of Dreams Mediterranean and our satellite casinos in Cyprus continue to face challenges due to the conflicts in the region but have had solid increases in property EBITDA quarter-to-quarter,” stated the Melco Resorts CEO.

Macau operations

At City of Dreams in Macau, for the three months to September 30, total operating revenues were US$563.9 million, compared with US$506.2 million in the prior-year quarter.

City of Dreams generated adjusted EBITDA of US$162.8 million in the third quarter of 2024, compared with US$153.9 million in the third quarter of 2023, mainly on “better performance in all gaming segments”.

Rolling chip volume at the property was US$3.30 billion in the latest reporting quarter, versus US$4.43 billion in the third quarter of 2023. The firm said the rolling chip win rate at the property was 3.97 percent in the latest quarter, versus 2.48 percent in the third quarter of 2023. That was above the expected rolling chip win rate range of 2.85 percent to 3.15 percent.

Mass market table games drop at City of Dreams in Macau increased to US$1.40 billion, compared with US$1.32 billion in the third quarter of 2023. The mass market table games hold percentage was 32.3 percent, compared with 32.1 percent in the prior-year quarter.

City of Dreams Macau’s gaming machine handle for the three months to September 30 was US$944.1 million, compared with US$807.5 million a year earlier. The gaming machine win rate was 3.2 percent, versus 3.6 percent a year earlier.

Total non-gaming revenue at City of Dreams in Macau was US$78.7 million, compared with US$73.6 million in the third quarter of 2023.

Total operating revenues at Studio City in Macau were US$364.7 million, compared with US$277.7 million a year earlier.

The property’s adjusted EBITDA was US$92.8 million, versus US$67.7 million in the prior-year period, “primarily a result of better performance in all gaming segments and non-gaming operations,” said the company.

Philippines, Cyprus

In the Philippines market, City of Dreams Manila had quarterly operating revenues of US$118.9 million, compared with US$124.9 million a year before.

Adjusted EBITDA was also down year-on-year, at US$45.9 million versus US$48.7 million in the comparable period of 2023. That was “primarily a result of softer performance in rolling chip and mass market table games segments, partially offset by better performance in the gaming machine segment,” said Melco Resorts.

In Cyprus, total operating revenues at City of Dreams Mediterranean and other satellite venues for the quarter ended September 30 were US$64.4 million, compared with US$53.4 million in the third quarter of 2023.

That market’s adjusted EBITDA more than doubled year-on-year, to US$15.1 million, compared to US$7.2 million in the prior-year quarter.

That was “primarily attributable to the ramp up of operations following the opening of City of Dreams Mediterranean in mid-2023, which led to a better performance in the gaming machine segment and non-gaming operations,” said Melco Resorts.