JP Morgan lowers estimates for Melco property-level EBITDA

Q2 EBITDA is expected to have been US$313m.

Macau.- JP Morgan Securities has revised its projection for Q2 property-level earnings before interest, taxation, depreciation, and amortization (EBITDA) for Melco Resorts & Entertainment to US$313m. That’s a decrease from its previous estimate of US$336m. Analysts expect US$260m to be generated by the casino firm’s operations in Macau.

Analysts Joseph Greff, Ryan Lambert and Samuel Nielsen said that while Melco is likely to have experienced growth in its gross gaming revenue (GGR) market share from 14 per cent in the previous quarter to 15 per cent, this is lower than they expected. They associated this with increased premium mass promotional activity, resulting in lower net revenue conversion and weaker EBITDA.

For the full year 2024, JP Morgan now projects group-wide property EBITDA of US$1.29bn, down 5.1 per cent from its previous estimate. For Melco Resorts’ operations in Macau, JP Morgan anticipates US$1.08bn, down 3 per cent from its earlier prediction. For next year, it forecasts group-wide property EBITDA of US$1.36bn next year, down 4.9 per cent from its previous estimate, and Macau property-level EBITDA of US$1.14bn, down 4.5 per cent.

In Macau, Melco Resorts operates City of Dreams, Studio City, and Altira as well as slot halls under the Mocha Club brand. The company also has a property in the Philippine capital Manila and gaming venues on the Mediterranean island of Cyprus. The group has announced an investment in a casino resort in Colombo, the Sri Lankan capital, with gaming operations set to begin in mid-2025. It reported operating revenue of US$1.11bn for Q1, up 55 per cent in year-on-year terms. EBITDA was US$298.8m compared with US$190.8m in Q1 2023.