First EBITDA growth in two years: MS

Macau gaming industry EBITDA could see its first positive year-on-year growth in 16Q3 after two years of decline, Morgan Stanley said in a report on Monday.

“Company EBITDA could grow to US$1.57 billion (+5% YoY, +7% QoQ) due to cost cutting, seasonality and higher rental income partially offset by increased operating expenses from the opening of the Parisian and Wynn Palace,” said the brokerage.

Macau gross gaming revenue grew by 1.2 percent year-on-year in 16Q3, according to data from the Gaming Inspection and Coordination Bureau earlier this month.

In the recent report, Morgan Stanley also adds it expects Cotai operators to outperform Peninsula operators, due to a GGR market share shift from Peninsula to Cotai, with the Parisian likely to report better ramp up than Wynn Palace.  

“We think Parisian's EBITDA will ramp faster due to: 1) lower opex (less new staff hiring); 2) higher non-gaming revenue (larger capacity); 3) better access; and 4) better positioned toward the grind mass segment, which is more resilient than premium mass and VIP,” said the analysts.

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