Morgan Stanley predicts break-even EBITDA for Macau in Q3
Morgan Stanley analysts predict Macau’s gaming industry could reach break-even EBITDA in Q3 2020 “due to cost rationalisation”, since overall operating expenses have decreased by 18% quarter-on-quarter in Q1, and it’s expected to decline another 5% in Q2.
It’s also estimated that EBITDA could reach $160m in Q3, which is a 93% drop compared to the previous year, an improvement over the predicted $1.07bn loss. In addition, Q4 EBITDA could reach $1.4bn, a drop of 42% compared to last year.
Macau’s GGR is also expected to drop by 59% in Q3 compared to the previous year, bringing in $3.63bn. The decline for Q4 should only be 23% at $6.97bn.
Galaxy Entertainment Group and Sands China are named as the only two companies with predicted EBITDA that is greater in Q3 than earnings in Q1. If the industry-wide operating expenses continue to decrease by 8 to 14% year-on-year, the last two quarters “should allow the companies to get back to pre-COVID EBITDA levels even when GGR is not there yet,” analysts said in a report. They also predict Macau’s GRR could reach $31.1bn in 2021 and $37.3bn in 2022.
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