Investment bank Morgan Stanley says Macau’s concessionaires will report a combined EBITDA loss of around US$320 million in 4Q22 when earnings season kicks off next week – wider than market consensus although narrowed from the US$459 million loss recorded in Q2 and US$574 million loss in Q3.
However, the Q4 result will be of less interest to the market than current January data given the sudden rebound in visitation following the easing of border restrictions between Macau, mainland China and Hong Kong on 8 January.
According to a series of research reports issued by Morgan Stanley in recent days, all six concessionaires will report EBITDA losses for Q4, with Sands China to post the biggest loss at US$88 million, followed by SJM at US$75 million, Wynn Macau at US$57 million, MGM China at US$56 million, Galaxy Entertainment Group at US$28 million and Melco Resorts at US$13 million.
“Yet the market is looking ahead,” said Morgan Stanley analysts Praveen Choudhary, Dan Xu, Jeffrey Mak and Gareth Leung, who estimate EBITDA could turn positive during the current quarter.
“1Q23 is the first quarter after three years for normalized Chinese and HK visitation into Macau. We are already seeing strong hotel bookings for the upcoming CNY holidays and strong pickup in visitation and GGR).
“Daily GGR is tracking at MOP260mn (33% of pre-Covid) for January 1-10 and could improve further during the CNY holidays, bringing the industry to positive EBITDA.”
Morgan Stanley is also predicting positive free cash flow in Q1, aided by Chinese visitation to Macau reaching 80% of 2019 levels during Chinese New Year.
