Gaming | Revenue to fall in Q2, Morgan Stanley predicts

Macau casinos’ earnings before interest, tax, depreciation and amortization (EBITDA) will report a fall by as much as 6 percent for the second quarter of the year (Q2), Morgan Stanley analysts forecast.

The causes of the fall reflect the decline in both the VIP and mass market segments, according to the firm.

Factors such as rising labor costs, lower win rates and softer gross gaming revenue in May and June were said to decisively lower EBITDA, helped by a “significant drop in VIP players.”

Morgan Stanley expects local casinos’ gross gaming revenue (GGR) to slow down by 4 percent in the same period to MOP74.4 billion (USD9.2 billion).
Despite the revenue fall, Morgan Stanley analysts still note that the general results for the second quarter are still up 17 percent when compared year-on-year with the same period last year.

The analysts are also concerned by troubling signs that some high rollers have steered away from local casinos amid trade tensions between the USA and China, as well as volatility in the Chinese currency.