Macau Q3 Casino Revenue at Nearly 70 Percent of Pre-COVID Levels – J.P. Morgan

MACAU, SAR (October 11, 2023) — Gross gaming revenue in Macau has grown 7 per cent quarter on quarter to reach nearly 70 per cent of pre-COVID levels in the third quarter of 2023, with the mass-market segment up 11 per cent to achieve a 95 percent recovery, Macau News Agency (MNA) reported a recap from J.P. Morgan Securities (Asia Pacific) says.

Analysts DS Kim, Mufan Shi, and Selina Li said in a recent report that the mass-specific segment accounted for 85 to 90 per cent of gross gaming revenue, and that revenue from the VIP segment had fallen 15 per cent last quarter to reach 24 per cent of pre-Covid levels compared with the preceding quarter.

“Overall, these fall a bit below what we had expected entering the quarter, but the delta was primarily on the VIP side (which contributes to little-to-no EBITDA) and mass was in-line (especially considering the typhoons in September),” the analysts pointed out.

According to the trio’s forecast, the sector’s EBITDA is expected to grow by 11 per cent quarter on quarter in the July to September period, reaching some US$1.9 billion (MOP15.3 billion).

The figure represents 80 per cent of the EBITDA performance achieved in the second quarter of 2019, indicating a significant recovery compared to the 69 per cent recovery in the second quarter of the year.

Additionally, sector-wide EBITDA margin is projected to expand by at least 100 basis points quarter-on-quarter, reaching a record-high of 25.5 per cent compared to 23.5 per cent in the third quarter of 2019.

Each operator in the industry has the potential to generate substantial free cash flows, the investment bank said.

According to its analysis, the industry’s estimated EBITDA – some US$7.5 billion on an annualized basis – exceeds the financial obligations of interest, about US$1.5 billion per year, and capital expenditures, ranging between US$1.5 billion and US$2 billion per year, by more than two-fold.

SOURCE: Macau News Agency (MNA).