Citi Expects Strong Macau Casino EBITDA Despite Revenue Drop

Citi Forecasts Resilient 28% EBITDA Margins for Macau Casinos in Q2 2024 Despite Revenue Declines

Citi forecasts Macau gaming concessionaires to maintain strong aggregate EBITDA margins of around 28% in Q2 2024, despite slight declines in gross gaming revenues and profitability. The analysis by Citi’s George Choi and Ryan Cheung suggests a 5% quarter-on-quarter drop in industry EBITDA to US$1.95 billion, alongside a 1.6% decrease in GGR to MOP$56.4 billion (US$7.0 billion). They attribute this decline partly to weakened retail sales, projecting overall revenue, including gaming and non-gaming, to decrease by 3% compared to Q1.

“However, our analysis indicates that the aggregate EBITDA margin of the six casino operators remains resilient at approximately 28%, despite significant disruptions from The Londoner Phase II renovations and soft retail sales,” Citi stated.

“If our EBITDA margin forecast holds, it suggests that all six operators are managing player reinvestments prudently. Our Q2 2024 estimate implies an 80% EBITDA recovery compared to Q2 2019.”

Citi identifies Galaxy Entertainment Group and Melco Resorts & Entertainment as gaining market share in Q2 2024, with Galaxy expected to increase its share from 17.3% to 19.1%, driven by expanded marketing efforts and flexible player reinvestment strategies. Melco’s share is projected to rise from 14.3% to 14.8% due to improved performance at City of Dreams.

“We are closely monitoring Galaxy and Melco for potential positive catalysts over the next 30 days, anticipating stronger EBITDA performance compared to their peers,” the analysts noted.

Original Story by: IAG