All six of Macau’s concessionaires should now be generating ample free cash flow after the June 2023 quarter – the first full quarter since Macau dropped most remaining border restrictions on 8 January – saw industry gaming revenues rise by 31% sequentially, according to JP Morgan analysts.
In a Sunday note following publication of Macau’s June GGR numbers over the weekend, analysts DS Kim and Mufan Shi said headline revenue had reached 62% of pre-COVID levels for the quarter with mass GGR estimated to be back over 85% and VIP at 24%. This, they added, “should be more than enough for every operator – that is, even including SJM – to generate ample free cash flow with 70%+ recovery in EBITDA for the industry.”
The June numbers also suggest mass GGR reached 90% of pre-COVID levels for the month “at a pace and magnitude that’s almost unthinkably strong when the border re-opened less than six months ago.
“We estimate VIP recovery gained pace as well to 25%+ of pre-COVID, suggesting direct VIP volumes have more than doubled vs pre-COVID,” they explained. “This still isn’t moving the needle much for EBITDA and cash flows but [is] impressive nonetheless.”
With Q2 earnings season now just around the corner, JP Morgan said it expects another “beat-and-raise quarter” for most operators with upbeat commentary on the pace of recovery and solid summer holiday demand.
As reported by IAG, June GGR was MOP$15.21 billion (US$1.88 billion), down 2.3% compared to May but 514% higher than June 2022.
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