Casino revenue steady in early April: JP Morgan

Macau’s casino gross gaming revenue held steady in the first three weeks of April according to estimates from JP Morgan Securities. The brokerage estimated GGR at 12.5 billion patacas for the period, which the firm said was “in line with historical seasonality.”

The daily run rate for casinos in April was estimated at 595 million patacas, down just 5.4% from March. Last week saw stable revenue of around 600 million patacas per day according to JP Morgan’s analysis of industry checks. Mass market gaming revenue, including slot machines, was tracking over 110% of pre-pandemic levels while VIP play remained around 20% recovered from before the pandemic.

JP Morgan analysts expect some variation in quarterly earnings results among Macau’s six casino operators. Wynn Macau, MGM China, and SJM Holdings are forecast to report strong double digit earnings growth compared to the first quarter. However, Sands China, Galaxy Entertainment, and Melco Resorts may report earnings declines of 2-8% for the period.

Sands China already reported a 6.7% drop in adjusted property earnings before interest, tax, depreciation and amortization to USD610 million for the first three months of 2023.

JP Morgan attributed potential divergent results to differences in individual operator market shares and expense controls as overall industry recovery levels off near current run rates. The brokerage believes unique company factors will be more influential on profits going forward.

“This, in our view, happens as the industry recovery stabilizes at around current levels, which in turns makes the idiosyncratic factors (market shares, operational expenditure control, promotions) to be the key earnings driver for each operator, as opposed to the pace of industry recovery itself,” the JP Morgan team stated.

Overall, Macau’s casino industry appears to be stabilizing, with mass market gaming largely recovering to pre-pandemic levels, while VIP volumes remain at around 25% of their former strength. Staff Reporter