Banking group Morgan Stanley cut its 2023 Macau casino industry earnings forecast by 1.9% before interest, taxes, depreciation and amortization. Currently, Morgan Stanley expects to be just over $6.42 billion, compared to its previous estimate of $6.55 billion.
The agency also reduced its 2024 market EBITDA estimate by 6.3%, which it now expects to be about $8.88 billion, not the $9.48 billion it had expected.
This is because “fixed operating costs post-COVID are estimated to be 5% to 6% higher than 2019 levels,” said Tuesday’s report foreshadowing the third-quarter earnings season for six Macau operators compiled by analysts Praveen Choudhary, Gareth Leung and Stephen Grambling.
A number of Macau operators have previously said they expect permanent cost savings achieved during the COVID-19 pandemic. However, some operators, such as Galaxy Entertainment Group and Melco Resorts & Entertainment, have opened more hotels and event facilities since Macau emerged from pandemic-related travel restrictions.
JPMorgan Securities (Asia Pacific) said in a Tuesday note previewing its third-quarter industry figures that it “doesn’t anticipate major mistakes, but it appears to have performed less well than it did then” for some Macau names in terms of operators’ EBITDA.
JPMorgan pointed out that the Macau sector’s market capitalization was only $66 billion compared to its pre-COVID level of $100 billion to $140 billion, or “a historic peak of about $200 billion a decade ago.”
But against the backdrop of “soon-to-be-record EBITDA,” the market valuation “seemed somewhat unfair, especially given that the sector’s biggest regulatory risks in the past, such as license overhang and VIP/junket crackdowns, have already been eliminated.”
Morgan Stanley said in its Q3 preview that it expects industry company EBITDA to grow by about “12%” quarter-on-quarter and reach about 79% of 2019 levels.
Meanwhile, Morgan Stanley believes that over the next two years, SandChina’s operating expenses could be between 106% and 112% of 2019. The company’s EBITDA is expected to reach $2.17 billion and $2.83 billion in 2023 and 2024, respectively.
It predicts that the cost of Galaxy Entertainment will be 113% to 121% of the cost in 2019 next year and 2025. Galaxy Entertainment’s EBITDA is estimated to be HK$10.44 billion ($1.34 billion) this year and HK$15.83 billion next year.
Wynn Macau Inc. expects costs to be between 100% and 105% of costs in 2019. The company’s EBITDA could reach HK$6.4 billion this year and HK$8.32 billion in 2024.
The cost of Melco Resorts is set at 105% to 107% from 2019. The company’s EBITDA is estimated at $1.05 billion in 2023 and $1.48 billion next year.
BY: 온라인카지노