Macau’s concessionaires should see market-wide EBITDA grow by around 12% quarter-on-quarter for the three months to 30 September 2023, despite operating expenses potentially coming in higher than previously anticipated according to investment bank Morgan Stanley.
Releasing their 3Q23 earnings preview on Wednesday – with Sands China scheduled to kick off earnings season late next week – Morgan Stanley analysts Praveen Choudhary, Gareth Leung and Stephen Grambling said Macau-wide EBITDA could reach US$1.7 billion for the quarter, equivalent to 79% of 2019 levels, with free cash flow at around 70%.
This, they added, was largely on the back of mass gaming revenues: while industry GGR should grow 7% sequentially to 70% of pre-COVID levels, mass and slot revenue is expected to reach 91% of those levels. Likewise, Chinese visitation is estimated to be up 34% quarter-on-quarter to 81% of 3Q19.
By operator, the analysts believe Galaxy Entertainment Group and Wynn Macau will gain market share while Sands and MGM China will lose ground on the slower return of grind mass play. Melco Resorts could see minimal share gain despite new capacity in Studio City, and SJM’s new Cotai integrated resort Grand Lisboa Palace is tipped to turn EBITDA-positive for the first time due to industry revenue growth.
Despite the positive momentum, Morgan Stanley has trimmed its industry EBITDA estimates by 2% for 2023 to US$6.42 billion and by 6% for 2024 to US$8.88 billion, “mainly because we now assume higher fixed opex post-Covid at 5% to 6% above 2019 level,” the analysts said.
