Morgan Stanley: Macau Earnings to Reach 69% of 2019 Levels in Q2 2023

As Inside Asian Gaming (IAG) reports, banking group Morgan Stanley expects that the earnings before interest, tax, depreciation, and amortization (EBITDA) of the Macau industry will reach US$1.6 billion in the second quarter of 2023. The figure will reportedly represent a 46% increase over the first quarter of 2023 to testify about the Macau gaming industry heading to the pre-Covid levels.

Q2 2023 Revenue at US$4.79 Billion:

As the source reports, the Morgan Stanley‘s analysts Praveen Choudhary, Gareth Leung, and Stephen Grambling estimate that the remarkable Q2 2023 result for the region’s EBITDA will most likely be dictated by a 29% increase in the industry’s gross gaming revenue  over the preceding quarter. According to the same source, Macau’s GGR is projected at US$4.79 billion by the end of the quarter and expected to keep the rising momentum in the forthcoming period.

29% GGR Increase Driving EBITDA Levels:

Macau’s mass gaming market has reportedly benefited from a series of prominent events and concerts held over the previous period. The analysts reportedly expect the trend to continue in the next quarter as well. In this regard, they reportedly indicated that Q2 visits were at 60% of those seen in the pre-pandemic 2019 but these are expected to grow until the end of the year, according to IAG.

The Morgan Stanley’s analysts reportedly stated: “Spending per visitor is tracking 50% above 2019 level. Further upside to mass revenue could come from recovery in package tours, visitation from provinces further away from Macau and improving capacity for ferry and air travel. We forecast industry mass revenue to reach 115% and 125% of 2019 level in 2024 and 2025 [respectively].”

Still, the Q2 2023 EBITDA of almost US$ 1.65 Billion represents a 69% of the 2019 levels and is expected to continue the growing trend, according to GGRAsia.

Market Share Stabilization Expected:

As the mass revenue and EBITDA figures seem to continue the transit to the 2019 levels, the banking group experts estimate that the market shares will stabilize among the operators. Though, they reportedly expect that Wynn Macau and Melco Resorts will grab a larger slice of the revenue cake as these operators achieved the most significant upward movements in the previous two quarters.

IAG reports that Wynn seems to have built up its revenues after the renovation of its Wynn Macau facility, while Melco benefited from the opening of an indoor water park, the EPIC-branded tower, and from hosting a series of concerts. At the same time, Sands and Galaxy fell behind as their lack of fully operational accommodation facilities had an adverse impact on their operations. However, these are reportedly expected to fully resume in Q3 2023.

MGM China Expected to Lead the Market:

According to the Morgan Stanley experts, the MGM China‘s addition of 200 gaming tables under the new 10-year concession may be the stepping stone for the operator to gain a larger market share in the following period. The analysts Choudhary, Leung, and Grambling reportedly said:

“We expect [MGM’s] 2024 mass market share at 13% and 2Q could be tracking at 14% to 15% (16% in 1Q). This means [estimated] 2024 mass revenue to be at least 30% above 2019 even if we assume no growth in industry mass revenue vs 2019. Consensus forecasts MGM 2024 EBITDA to be only 10% above 2019, which probably does not give enough credit to its market share or the benefits of operating leverage. Our [estimated] 2024 EBITDA [for MGM] is 30% higher than 2019.”