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Macau EBITDA up 140% from Q1 2020

The fourth quarter will see higher EBITDA than the first, analysts say.
The fourth quarter will see higher EBITDA than the first, analysts say.

According to a report from Morgan Stanley, the last quarter of 2020 is likely to show growth compared to the first quarter of the year.

Macau.- According to a report from banking group Morgan Stanley, the Macau casino industry’s combined earnings before interest, taxation, depreciation and amortisation (EBITDA) for the fourth quarter of 2020 is expected to be up by 140 per cent compared to the first quarter.

Analysts Praveen Choudhary, Gareth Leung and Thomas Allen wrote that in the upcoming earnings season the Macau industry was likely to report “total positive corporate EBITDA of approximately US$240 million in fourth quarter 2020″.

They added: “This is much better than the first quarter, when the industry made only US$100 million. The normal EBITDA run rate of US$2.3 billion per quarter in 2019 is still far away.”

According to Morgan Stanley, the growth has been driven by “lower operating costs as well as better revenue mix” in terms of gross gaming revenue (GGR).

It also noted that “industry daily operating expenses declined by 38 percent year-on-year in third-quarter 2020, and we expect a similar decline in fourth-quarter 2020. This is because … staff were let go or asked to take voluntary leave. The majority of this cost cutting will come back as volume increases.”

Morgan Stanley said it expected the fourth quarter 2020 to show an improvement in income from shop rents at resort malls, including turnover rent.

This could be a consequence of the resumption of the Individual Visit Scheme that allows mainland Chinese visitors to enter Macau.

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