Melco Resorts & Entertainment is likely to return to its pre-pandemic levels in terms of deleveraging in the next 12 to 24 months amid an EBITDA recovery powered by a mass gaming market, S&P Global Ratings has predicted.
According to a note from the provider of credit ratings on Monday, higher visitor arrivals and hotel expansion are expected to continue propelling mass-market growth in Macau.
The forthcoming inclusion of Xi’An city and Qingdao city in the individual visit scheme by Beijing this Wednesday will provide fresh impetus for visitation to Macau, S&P Global Ratings said.
According to the credit ratings provider, Macau’s mass gross casino revenue was up somewhere between 12 per cent and 13 per cent from 2019 levels in the first two months of 2024.
“This trends at the higher end of our 5 percent to 15 percent growth forecast for 2024, compared with 2019 levels,” it pointed out.
Last week, Melco reported adjusted property EBITDA of US$303 million (MOP2.44 billion) for the fourth quarter of 2023 – 8.1 per cent higher compared to a quarter earlier.
“Melco’s EBITDA recovery could accelerate in the coming quarters. Solid mass gaming trends and incremental contributions from Studio City Phase 2 will likely support this,” it said, adding that the company’s mass gross gaming revenue was up 22 per cent from 2019 levels in the recent Chinese New Year holiday.
“Melco’s property EBITDA was also higher than 2019 levels in that period,” the credit ratings provider said.
“Our base case assumes the company’s EBITDA will be 94 per cent of 2019 levels in 2024 and 7 per cent higher than 2019 levels in 2025. This compares with about a 75 percent level in the fourth quarter of 2023.”
