Investment bank Citi has forecasted that the combined EBITDA margins for Macau’s six largest gaming concessionaires will maintain strong performance, projected to reach an estimated 28% in June 2024. According to the analysis conducted by Citi’s George Choi and Ryan Cheung, “industry EBITDA is likely to have decreased about 5% quarter-on-quarter to approximately MOP15.66bn (US$1.95bn), even though GGR only fell by 1.6% quarter-on-quarter to MOP56.4bn (US$7.02bn).”

Citi Forecasts Strong EBITDA Margins for Macau’s Top Gaming Concessionaires in June 2024

Despite the slight decline in gross gaming revenue (GGR), the EBITDA margins for the major casino operators in Macau have held up well. Citi noted, “Our analysis suggests that EBITDA margin for the six casino operators in aggregate still holds up relatively well at around 28% – and this is already reflecting the significant disruption from The Londoner Phase II renovations and the weaker retail sales.”

Market Share Gainers: Galaxy Entertainment Group and Melco Resorts & Entertainment

Galaxy Entertainment Group and Melco Resorts & Entertainment were highlighted as the key market share gainers in the second quarter of 2024. Galaxy Entertainment Group saw an increase in market share from 17.3% to 19.1%, attributed to an “increase in the number of marketing hosts and a more flexible player reinvestment strategy.” This strategic approach has evidently paid off, allowing Galaxy to capture a larger portion of the market.

Melco Resorts & Entertainment also demonstrated substantial growth. Melco’s revenue for the first quarter of 2024 surged by 55%, with adjusted EBITDA showing an impressive increase of over $100 million. This robust performance underscores Melco’s successful strategies in navigating the competitive gaming landscape in Macau.

Revenue Growth Among Other Concessionaires

The other major gaming concessionaires in Macau also reported significant revenue growth in the first quarter of 2024. MGM’s revenue surged to HK$8.3bn (US$1.06bn), showcasing the strength of its operations. Similarly, SJM’s gross gaming revenue reached HK$6.89bn (US$882m), indicating a solid performance in the market.

Wynn Resorts also posted strong revenue figures, with revenue at $1.86bn. These results reflect the overall positive trajectory of the gaming industry in Macau, despite the challenges posed by ongoing renovations and weaker retail sales.

Macau’s Gross Gaming Revenue Growth in June 2024

In June 2024, Macau’s gross gaming revenue reached MOP$17.7bn (US$2.21bn), representing a year-on-year growth of 16.4%. This growth underscores the resilience of the Macau gaming market and its ability to recover and thrive amidst various challenges.

The Impact of The Londoner Phase II Renovations

The Londoner Phase II renovations have been a significant factor affecting the gaming industry in Macau. Despite the disruptions caused by these renovations, the overall EBITDA margins have remained strong, highlighting the resilience and strategic adaptability of the top gaming concessionaires.

Outlook for the Future

The positive outlook for Macau’s gaming industry is further bolstered by the strategic initiatives and robust performance of its leading concessionaires. The projected 28% EBITDA margin for June 2024 is a testament to the effective strategies employed by these operators to navigate the complexities of the market.

As the industry continues to evolve, the emphasis on innovative marketing strategies, strategic reinvestments, and operational efficiency will be crucial in maintaining and enhancing profitability. The ability to adapt to market dynamics and leverage growth opportunities will play a pivotal role in sustaining the positive momentum in Macau’s gaming sector.

Conclusion: The Analysis

The analysis by Citi highlights the strength and resilience of Macau’s top gaming concessionaires. Despite minor quarterly declines in GGR, the overall EBITDA margins have remained robust, reflecting the effective strategies and operational efficiency of these operators. With continued growth and strategic initiatives, the future outlook for Macau’s gaming industry remains positive.

FAQs About Macau’s Gaming Industry Performance and Citi’s Forecast

1. What is the projected EBITDA margin for Macau’s six largest gaming concessionaires in June 2024?

The projected EBITDA margin for Macau’s six largest gaming concessionaires is estimated to be 28%.

2. What does EBITDA stand for, and why is it important?

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company’s overall financial performance and is used to compare profitability between companies and industries.

3. How did the gross gaming revenue (GGR) change in June 2024?

In June 2024, Macau’s gross gaming revenue (GGR) reached MOP$17.7bn (US$2.21bn), representing a year-on-year growth of 16.4%.

4. Which gaming concessionaires were noted as market share gainers in the second quarter of 2024?

Galaxy Entertainment Group and Melco Resorts & Entertainment were noted as market share gainers in the second quarter of 2024.

5. How did Galaxy Entertainment Group increase its market share?

Galaxy Entertainment Group increased its market share from 17.3% to 19.1% due to an increase in the number of marketing hosts and a more flexible player reinvestment strategy.

6. What was Melco Resorts & Entertainment’s performance in the first quarter of 2024?

Melco Resorts & Entertainment’s revenue for the first quarter of 2024 surged by 55%, with adjusted EBITDA showing an impressive increase of over $100 million.

7. How did other major gaming concessionaires perform in the first quarter of 2024?

Other major gaming concessionaires also showed significant revenue growth:

• MGM’s revenue surged to HK$8.3bn (US$1.06bn).
• SJM’s gross gaming revenue reached HK$6.89bn (US$882m).
• Wynn Resorts posted revenue of $1.86bn.

8. What impact did The Londoner Phase II renovations have on the gaming industry in Macau?

The Londoner Phase II renovations caused some disruptions, but overall EBITDA margins remained strong, highlighting the resilience and strategic adaptability of the top gaming concessionaires.

9. What are the factors contributing to the strong performance of Macau’s gaming industry?

The strong performance is attributed to innovative marketing strategies, strategic reinvestments, operational efficiency, and the ability to adapt to market dynamics.

10. What is the outlook for Macau’s gaming industry?

The future outlook for Macau’s gaming industry remains positive, with continued growth and strategic initiatives expected to maintain and enhance profitability.