Morgan Stanley cuts Macau casino EBITDA forecast by 1.9%
It now expects industry EBITDA to reach US$6.42bn.
Macau.- Morgan Stanley has revised downwards its earnings before interest, taxation, depreciation, and amortisation (EBITDA) projections for Macau’s casino sector for 2023 and 2024. Analysts Praveen Choudhary, Gareth Leung, and Stephen Grambling provided a revised EBITDA estimate for the entire Macau gaming industry of US$6.42bn for 2023, down from a previous estimate of US$6.55bn.
They also reduced their estimate for 2024 by 6.3 per cent to US$8.88bn. They attributed the revision to an expectation of increased fixed operating costs to 5 to 6 per cent above 2019 levels. Macau operators previously said some cost cuts made during the Covid-19 pandemic would become permanent. However, some companies, like Galaxy Entertainment Group and Melco Resorts & Entertainment have expanded hotel and event facilities.
Morgan Stanley’s third-quarter preview predicts that corporate EBITDA for the industry will grow by approximately 12 per cent quarter-on-quarter, reaching roughly 79 per cent of 2019 levels.
It estimates that Sand China‘s operating expenses for the next two years could be between 106 per cent and 112 per cent of 2019 levels at US$2.17bn and US$2.83bn, respectively. For Galaxy Entertainment, costs are expected to be between 113 per cent and 121 per cent higher next year and in 2025. EBITDA is forecast at HK$10.44bn (US$1.34bn) this year and HK$15.83bn next year.
Wynn Macau‘s EBITDA is forecast to reach HK$6.40bn this year and HK$8.32bn in 2024. Melco Resorts EBITDA is forecast at US$1.05bn and US$1.48bn.
Morgan Stanley assesses that MGM China Holdings‘s operating expenses will be between 114 per cent to 118 per cent of its 2019 levels in the next two years. The firm is expected to reach an EBITDA of HK$6.28bn this year and HK$7.09bn in 2024.
The institution does not provide any estimate for SJM Holdings‘s operating expenses in 2024 and 2025. It expects EBITDA for 2023 to be down by 8 per cent due to high operating expense assumptions. It predicts that SJM will achieve EBITDA of HK$1.74bn this year and HK$4.46bn next year.
