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A Macau operator's "unfavorable holdings" of casino games in February will "dwarf" as well as "dwarf" its earnings before interest, taxation, depreciation and amortization (EBITDA), Citigroup is previewing first-quarter earnings for the segment.
"Reflecting this negative operating leverage, we estimate that Macau's industrial EBITDA will improve only 2% quarter-on-quarter in the three months to March 31, slightly above $2.02 billion," analysts George Choi and Ryan Cheng wrote.
This comes despite a sequential increase of about 5.9% in Q1 GGR to less than MOP 57.33 billion ($7.11 billion) from MOP 54.11 billion in Q4 last year.
Citigroup expects Win Macao Inc WYN to have "probably benefited from luck" and "relatively unscathed in the ill-fated month of February," with a sequential 1.7% point increase in GGR market share to 15.1% in the first quarter.
The agency expects MGM China Holdings Ltd. to gain a sequential 0.7 percentage point share in the first quarter to 17.0 percent. Analysts said a Bruno Mars concert at MGM Cotai in January "helped" boost MGM Cotai's share.
Citigroup mentioned an update to MGM China's early adoption of Radio Frequency Identification (RFID) technology for game table operations, a trend that is shaping up in the Macau market, according to a public statement from the operators.
"We believe the technological advantage over peers is sustainable for much of this year, thanks to the early adoption of smart gaming tables," the brokerage said.
"Grand Lisboa Palace's market share remains about 2%," Citigroup said, referring to SJM Holdings' kotai flagship Grand Lisboa Palace and its first-quarter results, adding that the property's trading volume "remarkably improved."
Citigroup said Sands China Inc was likely among its "donors" of market share in the first quarter, with slices falling 2.0 percentage points sequentially to 23.4%, "likely hurt by unfavorable holdings."
Galaxy Entertainment Group Ltd. was expected to shed 0.8 percentage point to 17.1 percent due to "impact of massive concourse renovation disruptions in the Galaxy Macau before the Chinese New Year's Golden Week." This was a reference to a re-editing of the main game venue of the group Kotai Flagship before the peak Chinese New Year holiday season in mainland China, Macau's main tourism supply market.
"We believe Melco's stake has not changed significantly," Citigroup added, referring to Melco Resorts & Entertainment Inc.
Deutsche Bank Securities mentioned a 14.6% market share in Melco Resorts for all of 2023.
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