MGM China could be first Macau operator to reach pre-COVID mass revenue in 1Q23: Morgan Stanley

In a Wednesday note, Morgan Stanley analysts Praveen Choudhary, Gareth Leung and Stephen Grambling tipped MGM China and Wynn Macau Ltd to be the highest mass market share gainers in 1Q23, while also enjoying the better EBITDA recovery.

However it is MGM the analysts see enjoying the fastest recovery through 31 March, primarily due to the company being granted an additional 197 new gaming tables on 1 January under the government’s revised table allocation – lifting its tally from 553 gaming tables at end-2019 to 750 in 2023.

As a result, Morgan Stanley predicts MGM China will record mass market revenue of US$522 million in 1Q23, representing 101% of its 2019 figure and lifting its 1Q23 mass market share to 15.3%. For FY23, the investment bank predicts MGM China will enjoy market share of 13.6% versus average share of 10% in 2019.

Wynn Macau, meanwhile, is tipped to reach 76% of 2019 mass market revenue, or US$511 million, on estimated market share of 15%.

The analysts also noted, “Better mass market share translates into better EBITDA recovery. We expect MGM China and Wynn property EBITDA at US$97 million (47% of 1Q19) and US$148 million (38% of 1Q19) respectively.”

Galaxy Entertainment Group is tipped to have the highest EBITDA recovery rate at 50% of 1Q19 corporate EBITDA (HK$2 billion), enabled by its better cost controls and non-gaming segments, Morgan Stanley added.

It sees industry-wide mass revenue rising 200% quarter-on-quarter to US$3.4 billion in Q1, representing 63% of 1Q19 levels, with total visitation rising 240% to around 50,000 or 43% of 1Q19 levels.

“At this level of mass revenue, the industry should be making positive EBITDA and FCF (free cash flow), in our view,” the analysts wrote.

By Ben Blaschke