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Macau operators’ Q4 EBITDA seen down 11 percent

The Q4 EBITDA of Macau’s gaming operators is likely to decline about 11 percent quarter on quarter, outpacing a drop in revenue, due to the falling mass market, according to a note from Morgan Stanley.

It says overall gambling revenue fell 9 percent quarter on quarter, with a 5 percent drop in VIP and 13 percent decline in mass quarter-on-quarter.

“For aggregate quarterly EBITDA, we are below consensus by 6 percent, which could drive 2014/15 estimates lower,” it said.

By company, Morgan Stanley forecasts Melco Crown Entertainment and Sands China to report better-than-average growth sequentially. Wynn Resorts could show the biggest decline.

“Dividend yield is getting very attractive, but weaker fundamentals and rise in capex could result in reduced special dividends in 2014,” it said.

For Q1, the firm says Macau’s overall GGR is down 18 percent year-on-year, and up 1 percent month-on-month based on the first 18 days of data, which may suggest a bottoming out.

“For 1Q15, the absence of a strong CNY season and negative news flow related to junkets

could mean another weak quarter. We currently forecast flattish GGR in 1Q vs. 4Q14. The market might await the policy address in March for confirmation of policies, especially from two new ministries – Health (regarding full smoking ban) and Finance (related to

table allocation and license extension).”


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