Macau’s six casino operating companies are expected to declare more than US$1 billion in combined EBITDA losses (earnings before interest, taxes, depreciation and amortization) for the second quarter of 2020.
That’s according to a new report from gaming analysts Praveen Choudhary and Gareth Leung of investment bank Morgan Stanley, who are characterizing the April-June period as the “worst quarter ever.” Combined EBITDA in the same period last year was $2.4 billion.
The pair said they also expect daily operating expenses for the group to fall a combined 21 percent year on year to around US$15 million, which could prove more interesting than the expected losses, and “could provide a glimpse into operating expenses (fixed costs), who managed to reduce the most, and what proportion of the cut is sustainable.”
Stringent border and travel restrictions in the Pearl River Delta region dating back to January have largely cut off the casino hub from its life’s blood of gamblers from mainland China and has devastated gaming revenues. Win has declined year on year at rates well above 90 percent in April, May and June.
Early July has shown some improvement, according to brokerage Sanford Bernstein, but analysts agree that meaningful recovery depends on when and to what degree border restrictions are eased and mainland cities resume issuing visas for individual travel outside the country.
Sanford Bernstein currently forecasts gaming revenue will be down 44 percent this year versus 2019, followed by a robust rebound in 2021.
Morgan Stanley also is looking for a good year in 2021, but currently estimates 2020 will end with revenue down 59 percent compared to 2019.
