A brokerage now expects the Macau casino sector in full-year 2022 to report a US$800-million loss in terms of earnings before interest, taxation, depreciation and amortisation (EBITDA), compared to a previous estimate at the start of the year of US$3.8 billion in positive EBITDA.
“We reduce estimates on 2022 and 2023 GGR [gross gaming revenue] to US$7 billion and US$16 billion, respectively, which are 38 percent and 30 percent below consensus,” wrote analysts Praveen Chaudhary and Gareth Leung of Morgan Stanley Asia Ltd, in a Monday note.
“This accordingly results in EBITDA revisions,” they added.
“At the beginning of this year, we had expected industry EBITDA at US$3.8 billion and US$8.3 billion for 2022 and 2023, respectively. After several revisions, we now see just a US$0.8 billion loss [for 2022] and US$3.6 billion [2023 EBITDA] profit, well below consensus,” they added.
“Finding an EBITDA anchor is key but difficult, since travel reopening time-line remains uncertain,” the analysts noted, referring to disruption to Macau’s tourism business associated with Covid-19 countermeasures in mainland China – the key target market – and in Macau.
Macau casino GGR fell to its lowest monthly tally this year in June – and the lowest since September 2020 – as the city faces biggest-ever Covid-19 outbreak. Such revenue amounted to MOP2.48 billion (US$310 million), equivalent to a daily average rate of MOP82.6 million.
All the city’s non-essential businesses – including casinos – have been shut since July 11, as a Covid-19 countermeasure. The government announced on Saturday that the partial lockdown would be extended to the end of Friday, July 22.
Macau had a total of 1,765 confirmed Covid-19 cases as of midnight on Monday, in the current local outbreak since June 18. A total of 10 new infections was detected on Monday, compared to 22 on Sunday, according to the local health authorities.
Data from the city’s gaming regulator published on Monday showed that the structure of the Macau casino market has been shifting away from VIP and towards mass-market play. Main-floor baccarat accounted for nearly 60 percent of all GGR in the three months to June 30.
