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Morgan Stanley: Macau Revenue Achieves 69% Level In 2019 In Q2 2023

Banking group Morgan Stanley expects the Macau industry's earnings before interest, taxes, depreciation and amortization (EBITDA) to reach $1.6 billion in the second quarter of 2023, according to a report by Inside Asian Gaming (IAG). The figure reportedly rose 46% compared to the first quarter of 2023 to testify that the Macau gaming industry is moving towards pre-COVID levels.

Q2 2023 Revenue $4.79 Billion:

According to the source's report, Morgan Stanley analysts Praveen Chaudhary, Gareth Leung and Stephen Grambling estimate that the surprising results for the second quarter of 2023 for EBITDA in the region will likely be determined by a 29% increase in the industry's total gaming revenue during the previous quarter. Macao's GGR is expected to be $4.79 billion by the end of the quarter, according to the same source, and will maintain upward momentum over the coming period.

GGR 29% Growth Drivers EBITDA Levels:

Macau's popular gaming market is known to have benefited from a series of prominent events and concerts held during the previous period. Analysts are reportedly expecting the trend to continue in the next quarter. In this regard, visits in the second quarter reached 60% of pre-pandemic 2019 but are expected to increase by the end of the year, according to the IAG.

Analysts at Morgan Stanley said, "Spending per visitor is tracking 50% higher than 2019 levels. Further gains in bulk revenue could result from a recovery in package travel, visits to provinces further away from Macau, and improved ferry and air travel capacity. We forecast industry bulk revenue to reach 115% and 125% of 2019 levels in 2024 and 2025."

Nevertheless, EBITDA in the second quarter of 2023 is nearly $1.65 billion, accounting for 69% of 2019 levels, according to GGRAsia, which is expected to continue the growth trend.

Market share stabilization expected:

Banking group experts estimate market share among operators will stabilise as bulk sales and EBITDA numbers appear to persist at 2019 levels. However, they expect to generate bigger revenue as Wynn Macau and Melco resorts make some of the most significant upward moves of the past two quarters.

Wynn appears to have seen a boost in revenue after renovating its Wynn Macau facility, according to IAG, while Melco has benefited from the opening of its indoor water park, EPIC-branded tower, and holding a series of concerts. At the same time, the Sands and Galaxy have seen a lack of fully operational accommodation, which has adversely affected their operations. However, it is expected to fully reopen in the third quarter of 2023.

MGM China is expected to lead the market:

According to Morgan Stanley experts, MGM China's addition of 200 game tables under the new 10-year concession could be a stepping stone for MGM China to gain a bigger market share in the next period. According to reports, analysts Choudhary, Leung, and Grambling:

"We expect [[MGM]] to have 13% bulk market share in 2024 and to be able to track down to 14% to 15% (16% in Q1) in Q2. This [[Estimated]] means that bulk sales in 2024 will be at least 30% higher than in 2019, even assuming that industry bulk sales do not grow compared to 2019. Consensus predicted MGM 2024 EBITDA to be 10% higher than in 2019, which probably does not provide sufficient credit for the benefits of market share or operational leverage. [[Estimated] MGM's] 2024 EBITDA is 30% higher than in 2019."