Macau second-quarter aggregated earnings shortfall expected to top $1 billion

The lingering impacts of the coronavirus pandemic will soon reportedly prompt the six licensed casino operators in Macau to detail combined second-quarter deficits in earnings before interest, tax, depreciation and amortization of over $1 billion.

According to a report from Inside Asian Gaming, this is the forecast of global brokerage and investments firm Morgan Stanley regarding the upcoming financial results for SJM Holdings Limited, Melco Resorts and Entertainment Limited, MGM China Holdings Limited, Galaxy Entertainment Group Limited and the local Sands China Limited and Wynn Macau Limited subordinates of Las Vegas Sands Corporation and Wynn Resorts Limited respectively.

Lasting lull:

The threat of the potentially-deadly ailment led officials in Macau to shutter every one of the enclave’s 39 commercial casinos for a 15-day period from February 4. Although these venues have since re-opened, the source explained that they have been consequently struggling to attract gamblers owing to a strict set of coronavirus-related travel restrictions and social distancing protocols.

Significant shortfall:

Morgan Stanley analysts Gareth Leung and Praveen Choudhary reportedly announced that the six Macau casino operators are expected to chalk up aggregated second-quarter losses in earnings before interest, tax, depreciation and amortization of approximately $1.04 billion with one of the biggest loser being Sands China Limited courtesy of a $286 million shortfall. The pair purportedly also asserted that Melco Resorts and Entertainment Limited is projected to record a similarly-dismal deficit of $205 million to make the three-month period the ‘worst quarter ever’ for the local casino industry.

Responsible reaction:

However, Leung and Choudhary reportedly declared that the results could conversely ‘provide a glimpse into operating expenses’ and who had ‘managed to reduce the most and what proportion of the cut is sustainable.’ They purportedly clarified that this would likely reveal the companies who had been better able to control their operating expenses with the combined daily rate appearing to have already dropped by 21% year-on-year to around $15 million.

Reportedly read a statement from Leung and Choudhary…

“Macau stocks rose 21% in the second quarter to outperform the Hang Seng Index by 15 percentage points. We think the market believes the worst is behind us and pent up demand and removal of overseas destinations as a choice could drive upside to estimates. While the second-quarter numbers may not provide when the travel restrictions will be lifted or how big 2021 could be, it can answer two questions in who controlled costs the most and who lost the least as a percentage of enterprise value.”