Macau GGR rebounds to 70% of pre-Covid-19 levels, JP Morgan says

Macau’s gross gaming revenue was up 7 per cent quarter-on-quarter in Q3, according to a report.

Macau.- A report by JP Morgan Securities (Asia Pacific) says that Macau’s GGR rose by 7 per cent in quarter-on-quarter terms for the three months to September 30. Analysts said GGR reached 70 per cent of pre-Covid-19 levels.

Analysts DS Kim, Mufan Shi, and Selina Li highlighted the recovery of the mass-market segment, which saw 11 per cent growth, reaching a 95 per cent recovery. In contrast, the VIP segment declined 15 per cent decline compared to the previous quarter, reaching only 24 per cent of pre-Covid-19 levels. The mass-market segment typically accounts for 85 per cent to 90 per cent of GGR.

Analysts said the results fell slightly below expectations, primarily due to the challenges in the VIP sector. However, the mass-market performance remained in line with predictions, given the impact of typhoons in September.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) was forecast to have risen 11 per cent quarterly to MOP15.3bn. This would represent 80 per cent of EBITDA in the second quarter of 2019. The sector-wide EBITDA margin is expected to have risen by at least 100 basis points quarter-on-quarter, reaching a record 25.5 per cent compared to the 23.5 per cent recorded in the third quarter of 2019.

J.P. Morgan Securities emphasised that every operator in the industry has potential to generate free cash flows. Their analysis indicated that the industry’s estimated EBITDA, amounting to approximately US$7.5bn on an annualised basis, surpasses financial obligations in interest (about US$1.5bn per year) and capital expenditures (ranging between US$1.5bn and US$2bn per year) by more than two-fold. 

See also: Macau GGR reaches US$824.5m in first 8 days of October