Macau EBITDA growth lags amid strong Q2 GGR growth
Citigroup has highlighted the impact of extensive promotional activity.
Macau.- Casinos in Macau saw the strongest quarter since reopening after Covid-19 lockdowns in Q2, with gross gaming revenue (GGR) rising 8.3 per cent year-on-year to MOP61.12bn (US$7.58bn), according to a Citigroup analysis. However, EBITDA growth lagged, increasing by just 3 per cent year-on-year to US$2.045bn due to what analysts described as an “unfavourable revenue mix.”
Citigroup analysts George Choi and Timothy Chau highlighted the impact of a higher-than-expected VIP contribution, as well as extensive promotional activity tied to high-profile entertainment events, including a concert series by Hong Kong pop icon Jacky Cheung at Galaxy Arena. While these initiatives boosted footfall and GGR, they also led to increased offers, squeezing margins.
“The slightly unfavourable revenue mix will likely lead to a minor reduction in industry EBITDA margin, down 60 basis points to 27.3 per cent,” the analysts noted. They emphasised that this was not due to a battle among operators but a structural effect of the segmentation shift.
In terms of operator performance, MGM China was the quarter’s biggest market-share gainer, climbing 0.9 percentage points quarter-on-quarter to 16.8 per cent. Galaxy Entertainment increased its share by 0.6 points to 20.3 per cent amid the Galaxy Arena events. SJM Holdings saw the steepest decline, losing 1.4 points to 12.3 per cent.
Melco Resorts, Sands China, and Wynn Macau each saw modest fluctuations of less than 0.5 percentage points. Citi placed 30-day upside catalyst watches on both Melco and Galaxy, citing strong EBITDA forecasts, with Melco’s adjusted property EBITDA projected to grow 12 per cent year-on-year to US$338m.
Analysts expressed optimism. “Players’ appetite for gaming remained strong despite geopolitical tensions and economic uncertainties,” they wrote. “In our view, the Macau gaming sector deserves more credit from investors.”
Citi raised target prices across its Macau gaming coverage by an average of 9 per cent, with Melco seeing the most significant revision. Wynn Macau and parent Wynn Resorts were both downgraded from Buy to Neutral.
