Four out of six Macau operations can target the Thai market

Four out of six casino concessions in Macau have "expressed interest in investing in Thailand" against the backdrop of considering legalizing casinos, a report by brokerage CLSA Ltd said on Monday.

The agency believes the annual gross gaming revenue (GGR) value of Thailand's mostly foreign player-led casino industry could reach $8.5 billion, up to $30.8 billion, but CLSA says the "basic case is $15.1 billion."

"Among Macau game concession operators, we believe Galaxy , Las Vegas Sands , MGM Resorts and Wynn Resorts have expressed interest in investing in Thailand," the report said, referring to the parent group of Macau licensees.

" In contrast, Melco and SJM are less likely to show interest given balance sheet constraints," Hong Kong-based CLSA analysts Jeffrey Kiang and Leo Pan added along with fellow Thai research director Napat Chantaraserekul.

Las Vegas Sands, the parent company of Macau operator Sands China Ltd., is already diversifying its Asian region through the Marina Bay Sands Resort in Singapore. MGM Resorts, the parent company of Macau-licensed MGM China Holdings Ltd., is investing in the MGM Osaka Casino Resort in Japan. Macau's Concession Air Win Win The resort is building Win Al Marjan Island in Ras al-Kaima, United Arab Emirates.

Like the five other Macau operators, Galaxy Entertainment, which previously pioneered the Japanese market, is "still looking to expand overseas, supported by a cash-filled balance sheet," CLSA said.

"Thailand desperately needs economic recovery due to rising debt due to COVID-19," analysts' report said.

"In a decisive move, lawmakers voted to legalize the game, bringing the opening of land-based casinos closer together. Targeting foreign visitors as the main players, the proposed gaming license will be valid for 20 years at a 17 percent tax rate. Potential license holders need to invest at least $2.7 billion," CLSA added.

"We expect such a process to last a year or two, followed by another three to four years of construction," the brokerage said in a vote on its steering committee report in March, suggesting that the first entertainment complex could be operational as early as 2029.

CLSA said a 17% game tax on about 15.1 billion GGR is equivalent to $2.6 billion annually.

It suggested that the property-level margin for earnings before interest, taxation, depreciation and amortization (EBITDA) could exceed 40%.

CLSA said, "With comparable gaming tax rates... From Singapore to the Philippines, Thailand's entertainment complex is well positioned to deliver similar real estate EBITDA margins," it said.

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