Investment bank Morgan Stanley says it now expects Macau’s casino concessionaires to print an industry EBITDA loss of around US$800 million in 2022 given the ongoing lockdown and unpredictability around the SAR’s “zero-COVID” policy.
While admitting that finding an EBITDA anchor is difficult, analysts Praveen Choudhary and Gareth Leung said there EBITDA estimates for the next 18 months were considerably lower than consensus, albeit rising back to better than 2019 levels by 2024.
“2019 industry EBITDA was US$9.2 billion,” they wrote in a Monday note. “At the beginning of this year we had expected industry EBITDA at US$3.8 billion in 2022 and US$8.3 billion in 2023.
“After several revisions, we now see just a US$800 million loss (in 2022) and US$3.6 billion profit (in 2023), well below consensus. We are 44% below consensus for 2023e EBITDA as we expect reopening to be gradual (over 2023) and not in one go (nor in 2022).
“However, using 2023e EBITDA to value the stocks provides another 45% downside to current market cap. On the other hand, if 2024 is a normalized year (110% of 2019 EBITDA), upside appears quite high (+114%).”
Morgan Stanley has also revised down its GGR (gross gaming revenue) estimates to US$7 billion in 2022 and US$16 billion in 2023, 38% and 30% below consensus, respectively.
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