Gaming operators to end 2022 with US$800 mln in negative results – Brokerage

Macau SAR gaming operators are now expected to end 2022 with nearly US$800 million in EBITDA losses after the most recent pandemic outbreak, a Morgan Stanley report estimates.

The brokerage had predicted 2022 to end with an industry positive EBITDA of US$991 million at the beginning of the year, with annual gross gaming revenue expected to drop to US$7 billion this year from the US$11 billion reported in 2021.

‘We believe 2022 GGR will be worse than 2021 at -38 per cent YoY due to occasional COVID spikes and lock-downs in Mainland China and Macau in 2022. Also, we now expect full travel reopening to happen only from 2Q23,’ Morgan Stanley analysts state in the report.

Therefore under its new estimates, gross gaming revenue predictions for 2022 and 2023 GGR were reduced to 18 per cent and 44 per cent, respectively, of 2019 levels, when they reached about MOP292.4 billion (US$36.1 billion).

More than 1,700 confirmed Covid cases have been uncovered in Macau since June 18, with all non-essential business operations, including casinos, ordered to close since July 11.

The brokerage also noted that in a zero revenue scenario the gaming industry cash burn could be as high as US$2.2 billion.

‘Most operators’ cash and undrawn liquidity can support cash burn (including development capex) for less than two years. Sands and SJM can support only 15 and 9 months, respectively; Wynn Macau, MGM China,and MLCO 19-20 months; Galaxy 27 months,’ its report added.