The industry wide debt of Macau’s six casino concessionaires is estimated to have reached US$24 billion as of 30 September 2022, further impacted by another loss-making quarter on the back of China’s strict COVID-prevention measures, according to Morgan Stanley.
With earnings release season set to start again later this month, the investment bank said in a 3Q22 preview note this week that it expects concessionaires to report a combined corporate EBITDA loss of US$603 million for the quarter – the lowest since Individual Visit Scheme resumption in September 2020 – with US$1.5 billion in cash burn.
This, according to analysts Praveen Choudhary and Gareth Leung, raises industry net debt to US$24 billion – up from around US$5 billion at the start of the pandemic – even as the impending return of eVisas and package tours from mainland China brings some hope of improvement in Q4.
Based on early estimates, 3Q22 GGR came in at around MOP$5.5 billion (US$680 million), down 35% on 2Q levels and just 8% of 3Q19, with mass revenue comprising MOP$4.5 billion (US$557 million) of that total.
However, the analysts mused that Q4 looms as key to the industry’s recovery prospects.
“October Golden Week visitation was in line with May Golden Week 2022, despite stricter Covid control measures,” they wrote. “Daily GGR of MOP$200 million (US$25 million) was also similar to May Golden Week which is encouraging.
“October GGR could be muted but we expect a gradual resumption of e-IVS visas and package tour to start from Nov 2022. This could drive 4Q22 EBITDA to 8% of 2019.”
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