Macau Q4 EBITDA under pressure from mass market declines

Macau operators are likely to see EBITDA under more pressure than revenue in Q4 because of a “more intense mass competitive environment,” with higher promotional costs pressuring margins, UBS said in a note.

In Q4, gross gambling revenue was down 9 percent from the previous quarter and 25 percent year on year. VIP was down 32 percent year on year and 6 percent sequentially, while mass dropped 9 percent from a year ago and 12 percent from the prior quarter.

“We expect sector EBITDA in Q4 to be down -23 percent YOY, with LVS and MGM China declining less than that in terms of YOY declines, while WYNN, SJM, Galaxy and MPEL should decline more than -23 percent,” it said.

From the prior quarter, UBS expects Melco Crown Entertainment to be the best performer as it was the only operator growing VIP volume over the period and it took mass market share at City of Dreams.

Wynn Resorts Q4 Macau EBITDA is likely to drop 33 percent from the prior year, driven by market share losses in all segments, the note said.

 

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