Investment bank Citi said in a Monday note that it anticipates aggregate EBITDA margins for Macau’s six gaming concessionaires to have maintained strength throughout the June 2024 quarter at around 28% – despite a sequential decline in both gross gaming revenues and profitability.
According to analysis by Citi’s George Choi and Ryan Cheung, industry EBITDA has likely fallen by around 5% quarter-on-quarter to US$1.95 billion, despite GGR falling by only 1.6% quarter-on-quarter to MOP$56.4 billion (US$7.0 billion). This, they said, is largely due to weakness in retail sales, with total revenue including both gaming and non-gaming tipped to have fallen by 3% compared with Q1.
“However, our analysis suggests that EBITDA margin for the six casino operators in aggregate still holds up relatively well at around 28% – and this is already reflecting the significant disruption from The Londoner Phase II renovations and the weaker retail sales,” Citi said.
“If our EBITDA margin forecast materializes, this would imply that all six casino operators in aggregate remain sensible in terms of player reinvestments. Our 2Q24 estimate industry EBITDA default case implies 80% EBITDA to recovery versus 2Q19.”
Citi has pegged Galaxy Entertainment Group and Melco Resorts & Entertainment as market share gainers in 2Q24, with Galaxy seen increasing its share from 17.3% to 19.1% due to an “increase in number of marketing hosts and a more flexible player reinvestment strategy.”
Melco’s share is seen growing from 14.3% to 14.8% on improved performance at City of Dreams.
“We have opened 30-day positive catalyst watches on Galaxy and Melco as we anticipate the two market share gainers to deliver better than peers quarter-on-quarter EBITDA improvements,” the analysts said.
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