Analysts expect Melco EBITDA to approach pre-pandemic levels next year

Relaxation of Covid-19 restrictions boosted Melco gaming revenues.
Relaxation of Covid-19 restrictions boosted Melco gaming revenues.

The operator is expected to benefit from the recovery in mass market casino revenue.

Macau.- S&P Global Ratings has predicted that Melco Resorts & Entertainment’s EBITDA will recover to near pre-pandemic levels in 2024, benefiting from a recovery in Macau’s mass market casino revenue. This year, Melco achieved EBITDA of about 70 per cent of 2019 levels.

S&P Global noted that Melco Resorts’ Q2 mass-market gross gaming revenue in Macau was 84 per cent of 2019 levels, “roughly in line with the market”. The ratings agency said: “We continue to expect Melco to outperform the market in the next few quarters, on the back of incremental contributions from Studio City Phase 2.” 

Phase 2 opened partially in early April. The US$1.2bn (MOP9.6bn) expansion of Studio City features two hotels (the W Macau and the Epic Tower), a six-screen cinema, a new gaming floor of more than 2,300 square metres, an additional 1,100 square metres of MICE space, and one of Asia’s largest indoor and outdoor water parks. The W Macau tower is due to open in September.

This week, Melco shared its financial results for the second quarter of 2023. Operating revenues were US$947.9m, up 220 per cent compared to the second quarter of 2022 (US$296.1m).

The company reported an increase in operating revenues in all gaming segments and non-gaming operations as a result of the relaxation of Covid-19 related restrictions in Macau in January 2023, the opening of Studio City Phase 2’s Epic Tower and indoor waterpark in April 2023 and the commencement of residency concerts at Studio City.

See also: Melco Resorts upgraded to outperform rating from Credit Suisse

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Melco Resorts & Entertainment S&P Global Ratings