{"id":254057,"date":"2023-01-17T14:24:40","date_gmt":"2023-01-17T20:24:40","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=254057"},"modified":"2023-01-18T12:56:40","modified_gmt":"2023-01-18T18:56:40","slug":"macau-profitability-returns-giving-rise-to-bullish-2023-outlook","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/macau-profitability-returns-giving-rise-to-bullish-2023-outlook\/","title":{"rendered":"Macau Outlook Brightens as Profitability Returns"},"content":{"rendered":"

China only recently relaxed its draconian zero-COVID policy. But it appears to be paying immediate dividends for Macau casino operators, which are already believed to be profitable.<\/p>\n

\"Macau
The Wynn Macau integrated resort, seen above. Profitability is back for Macau operators. (Image: Getty Images)<\/figcaption><\/figure>\n

While the six concessionaires are forecast to report fourth-quarter<\/a> earnings before interest, taxes, depreciation, and amortization (EBITDA) losses, those losses are expected to be well below those notched in the prior quarter. And it\u2019s likely the operators are making money to start 2023. Through the first 15 days of this month, gross gaming revenue (GGR) in Macau is averaging $35 million to $36 million per day, according to JP Morgan. The bank added that there\u2019s been upside momentum to those figures in recent days.<\/p>\n

What does this print tell us? Stripping out largely lifeless VIP segments, the print implies mass\/slot GGR run-rate has recovered to over 50% of pre-Covid levels, hitting well over EBITDA break-even levels (mid-30%s recovery in mass) and reaching an important milestone of FCF (free cash flow) breakdown (mid- 50%s of recovery in mass) for the industry,\u201d wrote analyst DS Kim.<\/p><\/blockquote>\n

Importantly for operators such as Galaxy Entertainment and Sands China<\/a>, recovery in the mass-market segment is robust and is already exceeding 40% of pre-pandemic levels. JP Morgan\u2019s Kim noted the percentage could exceed 60% with the arrival of the Chinese Lunar New Year.<\/p>\n

Macau Profitability Integral for Upgrades<\/h2>\n

Prior to China\u2019s recent departure from the zero-COVID protocols, the 2020 to 2022 time frame was rough on Macau operators. The six companies contended with temporary shutdowns and travel restrictions, which sapped visitation to the casino mecca.<\/p>\n

\n

As such, profits rapidly turned to losses while operating expenses surged and debt levels swelled<\/a>. The result is it\u2019s now impossible to find investment-grade credit among Macau concessionaires. But things could improve on that front if the current recovery expands.<\/p>\n<\/div>\n

\u201cWe recently affirmed ratings on Las Vegas Sands Corp., MGM Resorts International, Melco Resorts & Entertainment Ltd., Studio City Co. Ltd., and Wynn Resorts Ltd. Macao’s mass GGR recovery should allow rated issuers to reduce leverage to below our downgrade threshold, though not until late 2023 to early 2024,\u201d according to S&P Global Ratings.<\/p>\n

Citing \u201cstretched financials\u201d and the possibility of the return of COVID-19 restrictions, the ratings agency has \u201cnegative\u201d outlooks on those gaming companies.<\/p>\n

Macau Profitability Has Some Support<\/h2>\n

In addition to renewed profitability, Macau gaming firms are likely to see robust top-line increases this year, and there will be room for more improvement in 2024.<\/p>\n

We have revised our forecasts upwards for mass gross gaming revenue (GGR). In our base case, GGR will improve to 60%-70% of 2019 levels. This is at the higher end of our previous forecast 50%-70% range,\u201d<\/strong> added S&P.<\/p><\/blockquote>\n

The research firm also noted that revenue growth could stem high cash burn rates while potentially supporting stronger credit metrics over the next year.<\/p>\n","protected":false},"excerpt":{"rendered":"

China only recently relaxed its draconian zero-COVID policy. But it appears to be paying immediate dividends for Macau casino operators, which are already believed to be profitable. While the six concessionaires are forecast to report fourth-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) losses, those losses are expected to be well below those notched […]<\/p>\n","protected":false},"author":46,"featured_media":254065,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[69069,10],"tags":[81913,81903],"acf":[],"yoast_head":"\nMacau Profitability Returns, Giving Rise To Bullish 2023 Outlook<\/title>\n<meta name=\"description\" content=\"Macau operators are seeing profitability in January, setting stage for strong 2023.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/macau-profitability-returns-giving-rise-to-bullish-2023-outlook\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Macau Profitability Returns, Giving Rise To Bullish 2023 Outlook\" \/>\n<meta property=\"og:description\" content=\"Macau operators are seeing profitability in January, setting stage for strong 2023.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/macau-profitability-returns-giving-rise-to-bullish-2023-outlook\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2023-01-17T20:24:40+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-01-18T18:56:40+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/01\/wm-1-1024x642.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1024\" \/>\n\t<meta property=\"og:image:height\" content=\"642\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/macau-profitability-returns-giving-rise-to-bullish-2023-outlook\/\",\"url\":\"https:\/\/www.casino.org\/news\/macau-profitability-returns-giving-rise-to-bullish-2023-outlook\/\",\"name\":\"Macau Profitability Returns, Giving Rise To Bullish 2023 Outlook\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-profitability-returns-giving-rise-to-bullish-2023-outlook\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-profitability-returns-giving-rise-to-bullish-2023-outlook\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/01\/wm-1.jpg\",\"datePublished\":\"2023-01-17T20:24:40+00:00\",\"dateModified\":\"2023-01-18T18:56:40+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Macau operators are seeing profitability in January, setting stage for strong 2023.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-profitability-returns-giving-rise-to-bullish-2023-outlook\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/macau-profitability-returns-giving-rise-to-bullish-2023-outlook\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/macau-profitability-returns-giving-rise-to-bullish-2023-outlook\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/01\/wm-1.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/01\/wm-1.jpg\",\"width\":2482,\"height\":1556,\"caption\":\"The Wynn Macau integrated resort. 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