Broker cuts Macau 2H mass GGR 3pct to bad macro

One brokerage cut Macau's second-half volume gaming revenue (GGR) forecast by "3% to 4%" to 113% in the same period in pre-COVID trading, meaning it will be somewhat flat compared to the first half of this year.

JPMorgan Securities (Asia-Pacific) said its update was set in an "incredibly underperforming macro," which is understood to be referring to an adjustment in consumer demand for key Macau tourists and gamblers.

Securities analysts DS Kim, Mufan Shi and Selina Li also wrote of Sands China Ltd, a Macau operator that reported second-quarter earnings with its parent Las Vegas Sands on Wednesday, saying "gaming/retail sales are down 10%/30%" compared with previous projections.

This was meant to "reflect worsening luxury consumption in China, as seen by big mistakes and cutbacks in guidance from European luxury goods companies over the past few weeks."

As a result, the brokerage cut Sands China's 2024 full-year estimate for adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) by 8.4% from $2.55 billion to just below $2.34 billion.

Analysts added that Sands China reduced the company's full-year 2024 and full-year 2025 EBITDA by 10% overall, compared to the consensus of results prior to the second quarter, after the company "missed its revenue versus market expectations in the second quarter."

The agency suggested for Sands China that it will not have a positive impact on earnings until it remodels the collapse of the group's Cotai property. The Londoner Macao concludes at the end of the year.

"We still have five months to go before the Sands-specific positive change, namely the disruption of renovations, begins to ease significantly," analysts wrote.

They added: "Revised casino/stadium/room products must be brought back online in phases beginning in December 2024, so we assume EBITDA will gradually improve in 2025 to hit approximately $700 million by Q4 2025."

J.P. Morgan Securities' Joe Greff, Samuel Nielsen and Ryan Lambert suggested that the post-disruption period would likely mean "laying the groundwork for a wonderful Londoner ramp and likely above Macao's peer EBITDA growth in 2025."

The U.S. team also noted, "In terms of return on capital, Las Vegas Sands remains in steady share repurchase mode at $400-$500 million per quarter, but we would like to see it at the top of the range."

BY: 홀짜게임