Macau GGR reaches nearly 70% of pre-Covid levels, EBITDA expected to reach $1.7B in Q3

Gross gaming revenue in Macau has grown 7% quarter on quarter to reach nearly 70% of pre-Covid levels in the third quarter of 2023, with the mass-market segment up 11% to achieve a 95% recovery, as per investment bank JP Morgan. Moreover, the sector's EBITDA is expected to reach $1.7 billion in Q3.

Analysts DS Kim, Mufan Shi, and Selina Li said in a recent report that the mass-specific segment accounted for 85 to 90% of gross gaming revenue and that revenue from the VIP segment had fallen 15% last quarter to reach 24% of pre-Covid levels compared with the preceding quarter.

"Overall, these fall a bit below what we had expected entering the quarter, but the delta was primarily on the VIP side (which contributes to little-to-no EBITDA) and mass was in-line (especially considering the typhoons in September)," the analysts pointed out, as reported by Macau Business.

According to a separate Morgan Stanley report, Macau’s gaming sector is expected to see a 12 percent quarter-on-quarter increase in corporate EBITDA to MOP13.7 billion ($1.7 billion) for the third quarter, representing a recovery to 79% of the 2019 level.

Additionally, the sector-wide EBITDA margin is projected to expand by at least 100 basis points quarter-on-quarter, reaching a record high of 25.5% compared to 23.5% in the third quarter of 2019, as per JP Morgan. Each operator in the industry has the potential to generate substantial free cash flows, the investment bank said.

According to its analysis, the industry’s estimated EBITDA, some $7.5 billion on an annualized basis, exceeds the financial obligations of interest, about $1.5 billion per year, and capital expenditures, ranging between $1.5 billion and $2 billion per year, by more than two-fold.

Furthermore, Chinese visitation to Macau is estimated to rise by 34% compared to the previous quarter, reaching 81% of the pre-pandemic level. As per Morgan Stanley, Galaxy Entertainment Group and Wynn Macau were mass market share gainers last quarter, and Sands China and MGM China Holdings have lost some shares.

Analysts said that Galaxy Entertainment Group had benefited from its Phase 3 additions, including new hotel offerings such as Andaz and Raffles hotels. Meanwhile, Wynn Macau has received support from its renovated property on the Macau peninsula, enhanced premium offerings, and the potential normalization of the mass table win rate.

Moreover, the analysts believe that the third-quarter market share trends will be likely to continue into the fourth quarter of this year.