Macau casino operators to delay dividend payments, analysts say

Macau casino operators with US majority owners are unlikely to resume payment of dividends to their parent entity this year, according to S&P Global Ratings.

Macau.- S&P Global Ratings Inc has forecast that Macau casino operators with US-based majority owners will face no immediate pressure to resume dividend payments to their parent entities. Analysts see it as more likely that Wynn Resorts, MGM Resorts International and Las Vegas Sands Corp will resume dividend payments in 2024. None is currently engaged in discussions regarding dividends.

Sands China has confirmed that its ability to issue dividends is subject to conditions imposed by lenders, including the permitted consolidated leverage ratio. These conditions may still be applicable until the beginning of 2025.

S&P Global said all three US casino brands possess sufficient liquidity to support their investment plans outside of Macau. S&P’s director of corporate ratings, Melissa Long, said they continue to generate healthy cash flow from investments beyond Macau. She cited examples such as Las Vegas Sands’ ventures in New York and Singapore, MGM Resorts’ involvement in Japan and New York and Wynn Resorts’ projects in Boston and the United Arab Emirates.

The resilience of US domestic casino markets, recovering faster than China and Macau, has contributed to the sustained cash generation. Consequently, there is currently no immediate pressure for dividends from Macau operations. Instead, the focus remains on cash flow recovery, credit improvement and capital spending needs in Macau.

S&P Global Ratings Inc. has predicted that Macau’s mass-market gross gaming revenue (GGR) could reach between 75 per cent to 85 per cent of 2019 levels. That’s a significant upgrade from the previous forecast of 60 per cent.

The rating agency attributed the change to the faster-than-expected recovery in visitation and GGR at Macau’s casinos. Analysts expect mass GGR to achieve full recovery in 2024. VIP GGR is projected to remain at 20 per cent to 25 per cent of 2019 levels throughout 2023.