JP Morgan predicts Macau casinos’ 4Q EBITDA to show 10% increase

The earnings before interest, taxes, depreciation, and amortization (EBITDA) for Macau’s casino sector for the fourth quarter of 2023 would probably increase by 10% sequentially, according to JP Morgan Securities (Asia Pacific) Ltd.

Industry EBITDA is expected to rise by over 10% on a quarter-by-quarter basis, reaching around 85% of pre-Covid levels, according to analysts’ predictions. Compared to the 80% recovery seen in the third quarter of 2023, this is a significant improvement.

The firm is concerned about declining profits and growing operating costs despite the positive forecast. It is expected that investors would scrutinize operating expenses and player promotions/reinvestments, especially in light of the third-quarter’s narrow margin disappointments. However, overall patterns are anticipated to remain consistent from quarter to quarter.

The industry-wide Macau Gross Gaming Revenue (GGR) is expected to increase from US$22.75 billion in 2023 to around US$27.3 billion in 2024, according to JP Morgan. To meet the MOP180 billion threshold, all six of the city’s casino operators must increase their combined MOP108.7 billion non-gaming and overseas-marketing spending commitments to the Macau government by a minimum of 20%.

According to JP Morgan, the robust close to 2023 is shown by the December GGR, which rose 16 percent month over month and beyond consensus estimates. The recovery rate exceeded 81 percent, reaching 80% for the first time since travel to Macau, Hong Kong, and the Chinese mainland was normalized in January 2023. The fourth quarter saw record-high mass revenue from Macau’s casino operators, with headline gross gaming revenue rising by 11% and mass gross revenue rising by 12% to 13% on a quarter-over-quarter basis. Since the reopening, growth has finally returned to pre-Covid levels.

Original story by: GGRAsia