GGRAsia – MGM, Melco and Wynn likely 3Q winners in Macau: Nomura

MGM, Melco and Wynn likely 3Q winners in Macau: Nomura

Oct 20, 2017 Newsdesk Latest News, Macau, Top of the deck

Macau-based casino operators MGM China Holdings Ltd, Melco Resorts and Entertainment Ltd and Wynn Macau Ltd are likely respectively to report market share gains for the three-month period ended September 30.

That is according to a Thursday note from Japanese brokerage Nomura previewing the third quarter results announcement season for the city’s casino operators, scheduled to start next week.

“Commentary will likely focus on continued gross gaming revenue (GGR) strength in Macau (up 22 percent for the second straight quarter, led by 35 percent growth in VIP),” the Nomura analysts said.

The team added that Wynn Macau Ltd was “likely the biggest share taker in VIP” estimating it gained 60 basis points judged quarter-on-quarter, while it thought Melco Resorts and MGM China had in likelihood gained approximately 100 basis points each in the mass segment quarter-on-quarter, noting that both those operators had experienced low hold in mass operations in the second quarter of 2017.

“All other operators should report flat to down sequential GGR share,” said the Nomura team, regarding the third quarter.

Nomura stated in its latest note it expected MGM Macau (pictured) – the sole property currently operated by MGM China – to have generated earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$131 million in the third quarter.

The Japanese brokerage added it anticipated “a strong opening” for MGM Cotai. The property’s launch was previously scheduled for the fourth quarter of 2017 but has been delayed to January 29, 2018, MGM China announced in September.

Nomura also expected a “strong opening” for the Morpheus hotel tower at the City of Dreams Macau casino resort. The latter is owned and managed by Melco Resorts.

Melco Resorts’ chairman Lawrence Ho Yau Lung had mentioned in the firm’s second-quarter earnings call a “first quarter or second quarter” launch for the US$1-billion Morpheus. Nomura’s latest note mentions a second quarter launch.

The Japanese institution says Melco Resorts likely “gained around 10 basis points of sequential [overall] GGR share in the [third] quarter, to around 16.4 percent from 16.3 percent in the second quarter of 2017.” It estimates the firm will report third-quarter EBITDA of US$303 million for its Macau portfolio. Melco Resorts also runs a casino resort in the Philippine capital Manila.

Regarding Wynn Macau Ltd, Nomura estimates the firm generated third quarter EBITDA of US$305 million, helped by a “continued ramp” at its Wynn Palace casino resort in Cotai. “We assume Wynn [Macau Ltd] gains around 60 basis points of GGR share in the third quarter driven by a 60 basis point lift in VIP revenue share and 10 basis points in mass.”

Sands China Ltd meanwhile is likely to have lost share for a third consecutive quarter in the July to September period, Nomura stated. “The key question is if [Sands China] can stabilise its market share in Macau while facing new competition from MGM Cotai and Melco Resorts/Morpheus, which we doubt,” the brokerage added.

Nomura estimates Sands China generated total EBITDA of US$638 million in the third quarter.