The earnings before interest, taxes, depreciation and amortization (EBITDA) for Macau’s gaming industry properties are expected to decline 4% in the second quarter of 2024.
According to a report from Morgan Stanley analysts Praveen K. Choudhary and Gareth Leung, gaming operators’ operating expenses are forecasted to increase 3-4% quarter-on-quarter.
Increase in operating expenses for gaming operators is the primary reason for the decline, though they noted reinvestment costs could be flattening.
In June, Macau recorded its lowest monthly gross gambling revenue (GGR) this year at MOP17.69 billion, down 12% from the previous month. The figure recovered to 74% of the pre-pandemic level in 2019.
“We think June GGR number is positive amidst several concerns for the sector: (1) no free snacks for non-gamblers, (2) fewer referral programs, and (3) weaker retail sales and China macros,” the analysts wrote.
Morgan Stanley also projected Macau’s second quarter gross gambling revenue would fall 2% quarter-on-quarter to USD7.1 billion, reaching 77% recovery versus pre-pandemic level.
Another brokerage, Citibank, said Macau’s daily gambling revenue run rate is expected to rebound from seasonal lows around mid-July.
Citibank analysts forecast July revenue reaching MOP19 billion, translating to a daily average of MOP613 million and a 78% recovery compared to 2019. Despite recent declines, Citibank maintains a full-year growth estimate of 26%.
If Morgan Stanley and Citibank projections hold true, Macau gaming companies can expect earnings weakness, though stabilization may lie ahead in the seasonal summer months. VC
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