Macau casino EBITDA won’t normalise until at least H2 2023, analysts say

Analysts at Morgan Stanley predict EBITDA from Macau’s casino industry will not materialise until the second half of 2023 or possibly 2024.

Macau.- Praveen Choudhary and Gareth Leung, analysts at Morgan Stanley banking group, have predicted that Macau casino EBITDA will not normalise until at least the second half of 2023 a normalisation could happen during the second half of 2023. They added that debt in the industry “could surge to US$23bn” by the end of 2023.

Before the Covid-19 pandemic, Macau’s GGR was MOP292.5bn (US$36.3bn), while corporate EBITDA stood at about US$9.2bn. In 2021, the city reported full-year gross gambling revenue of MOP86.86bn (US$10.82bn).

Most Macau casino operators have recently reported positive EBITDA levels after cutting costs over the past two years. However, analysts noted a further easing of travel restrictions would be needed to improve EBITDA and increase GGR, especially in the mass market segment.

The analysts also noted that travel between Macau and the mainland is not expected to be further facilitated until 2023 and that the suspension of group tours is unlikely to be lifted before then.

Praveen Choudhary and Gareth Leung said: “Industrial debt increased from US$5bn at the end of 2019 to US$19nn at the end of 2021 and is on an upward trend. At the current net debt ratio of about US$850m per quarter, net debt could reach US$22.8bn by the end of 2022.”

See also: Macau casino stocks fall further as China intensifies Covid-19 measures