Brokerage Morgan Stanley has forecast that Macau gaming operators will report lower EBITDA figures for the second quarter compared to market consensus, due to an expected decrease in mass revenue and rising costs.
In a recent report, analysts Praveen K Choudhary, Gareth Leung, and Stephen W Grambling said that the city’s gross gaming revenue (GGR) is likely to see a 1-2 per cent quarter-on-quarter drop, while the industry’s mass GGR is predicted to decline by 2 to 3 per cent.
The analysts also anticipate that June’s GGR will reach MOP18 billion (US$2.2 billion), marking an 11 per cent month-on-month decrease.
Morgan Stanley’s analysis indicates a downside risk for Sands China’s EBITDA consensus estimates, as the company is believed to have lost mass GGR market share due to ongoing construction disruptions.
The analysts also say that that SJM is likely to achieve the market consensus of an 8 per cent quarter-on-quarter rise in EBITDA, attributed to the ramp-up of Grand Lisboa Palace.
The brokerage highlighted that the sector had underperformed the Hang Seng Index by 18 per cent year-to-date, while the recent weakness was due to ‘negative news flow and a lack of catalysts’.
Regarding the second-quarter results, Morgan Stanley analysts prefer Galaxy and MGM China.
In a Monday note, rating agency Moody’s Ratings said that they expected Macau-focused gaming companies SJM Holdings, Studio City Finance and its parent Melco Resorts & Entertainment to lower their adjusted debt/EBITDA over 2024 and 2025 to levels that better reflect their respective underlying credit quality.
For US-based gaming companies Las Vegas Sands Corp., MGM Resorts International and Wynn Resorts Finance, LLC that operate in Asia, adjusted debt/EBITDA has already largely retreated back toward pre-pandemic levels.
