Cash flow break-even tricky for Macau casinos

Macau’s six casino concessionaires can likely break even on an EBITDA basis this year with $38.18m in daily revenue, but getting to cash flow break-even will be trickier, said JPMorgan analysts.

The bank’s research team covering Asia-Pacific gaming projects $49.45m in daily turnover as the minimum needed for operators in the world’s largest casino hub to reach cash flow break-even in 2020.

That could be an ambitious goal considering that February and March gross gaming revenue there slumped nearly 88 per cent and almost 80 per cent, respectively.

The industry can stay EBITDA break-even at the gross gaming revenue run rate of around US$37.6m per day and cash flow break-even (post interest cost and maintenance capex) at $50m,” according to JPMorgan.

Getting to those levels is the issue for Macau operators, because with strict travel controls still in place stemming from the coronvirus, April GGR is a mere trickle, with some banks estimating a scant $8.76m per day in turnover to this point in the month.