Banking group Morgan Stanley says it is raising by circa 70 percent, on average, its estimates on 2023 earnings before interest, taxation, depreciation and amortisation (EBITDA) for Macau’s six casino operators, against the backdrop of market recovery.
The institution’s 2023 EBITDA estimates are also significantly above the mean figures regarding market-consensus for all the operators except Wynn Macau Ltd, stated Morgan Stanley. With that firm, the institution’s upward revision – to US$3.51 billion in 2023 EBITDA – is 16.9 percent below market mean.
Overall, however, “we see upside to both consensus earnings and last-trade valuation multiples” for Macau gaming stocks, said Morgan Stanley in a Monday memo.
The institution thinks MGM China Holdings Ltd’s 2023 EBITDA will be nearly US$3.18 billion, or 15.0 percent above market mean estimate. That firm runs MGM Macau and MGM Cotai.
Morgan Stanley posits Melco Resorts and Entertainment Ltd’s 2023 EBITDA as just under US$1.01 billion, or 30.5 percent higher than the market-mean assessment. That casino business controls City of Dreams and Altira Macau, and has a majority stake in the Studio City resort.
Sands China Ltd’s 2023 EBITDA is forecast, under the revision, at US$1.97 billion, or 39.7 percent above market mean estimate. The group runs its flagship Venetian Macao resort, as well as the Plaza Macao, the Parisian Macao, and the Londoner Macao, and its original Macau property Sands Macao.
Morgan Stanley indicates its revised number for Galaxy Entertainment Group Ltd is US$11.93 billion in 2023 EBITDA, which the institution says is 31.2-percent over market-mean assessment. The casino group runs Galaxy Macau, Broadway, StarWorld Hotel, and provides its licence to one satellite casino.
SJM Holdings Ltd’s 2023 revised EBITDA is forecast by Morgan Stanley at US$3.44 billion, or 110.2 percent above market-mean estimate. The casino firm runs Grand Lisboa Palace, Grand Lisboa, the Lisboa, and Oceanus, and shares its licence with a number of satellites in return for an economic interest.
Morgan Stanley also observed in its Monday note that currently on average for the Macau operators, net debt to EBITDA was 2.4 times, and equity was around 8.5 times EBITDA.
It added that “as companies will continue to deleverage – and not pay dividend – in the near term, net debt will decline, and the equity portion will rise”.
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”Post-Covid, I guess we continued to cut too deep to the bone in terms of our operating expenditure and how we conduct our business”
Chairman and chief executive of Melco Resorts