Macau casinos likely to post $1 billion loss in second quarter

Macau casino operators are expected to post a loss of over USD1 billion (8 billion patacas) collectively in their earnings before interest, tax, depreciation and amortization (EBITDA) for the second quarter, according to a Bloomberg survey of analyst estimates.
Each of the six operators will likely have negative quarterly EBITDA when they start reporting earnings in the coming weeks, according to the survey of eight brokerages. SJM Holdings Ltd. and MGM China Holdings Ltd. are expected to lead the tally of year-on-year declines.
Macau’s casino industry saw gaming revenues plunge by more than 90% for three straight months starting April, as the pandemic-causing novel coronavirus forced countries to shut borders.
Gross gaming revenue for the second quarter amounted to just 3.2 billion patacas, down 95.6% from the 73.3 billion patacas recorded in the same quarter a year earlier. According to data released this week by the Gaming Inspection and Coordination Bureau (DICJ), the mass market accounted for 53.5% of total gaming revenue in the quarter, continuing to slightly outweigh the VIP segment.
Recovery prospects brightened for the world’s largest gambling hub after neighboring Chinese province Guangdong lifted quarantine requirements last week for travelers returning from Macau.
Group tour visas and the Individual Visit Scheme (IVS) program both remain suspended. These two visa types account for the vast majority of cross-border travelers from the mainland.
“The initial enthusiasm around border easing is a sign of some pent-up demand, but without IVS restart, V-shape recovery is not expected,” Sanford C. Bernstein analyst Vitaly Umansky said in a July 20 note.
On the same day, banking group Morgan Stanley said that industry EBITDA “should break even in the third quarter of 2020, even though GGR [gross gaming revenue] is lower and revenue mix is weaker.”
However, “third-quarter EBITDA could [still] be lower than first quarter despite cost reduction, mainly due to less favorable revenue mix as mass recovers more slowly than VIP.”
Morgan Stanley admitted that it was hard to predict when Macau EBITDA would return to 2019 levels, but they “have assumed it to be 2022” in their model. DB/Agencies