MLCO - Macau casino revenue in June misses estimates and dips sequentially

2023-07-01 09:32:02 ET

The Macau Gaming Inspection and Coordination Bureau reported gross gaming revenue in the gambling region rose 514% year-over-year in June to $15.21B patacas ($307M). While the return of live performances in Macau and the four-day Dragon Boat Festival holiday were cited as traffic drivers during the month, the GGR mark missed the consensus estimate of analysts for a 530% year-over-year increase and was 2.3% lower than the GGR generated in May.

That sequential slowdown could raise concerns of a stumbling recovery in Macau and hit the share prices of the casino operators when trading resumes on Monday. However, JPMorgan noted in advance of the monthly revenue report that the long-term monthly sequential change from May into June averaged a 14% decline for the years through 2007 to 2022 (excluding the lockdown year of 2020).

For the first six months of 2023, Macau gross gaming revenue was up 205% year-over-year to $80.14B patacas ($9.93B). A tally that is still far short of the pre-pandemic $149B patacas generated in 2019 for the same time period.

Looking ahead, Roth MKLM analyst Edward Engel believes the easing COVID wave in China is driving a general rebound in Macau GGR. With an eye on the upcoming earnings reports in the sector, Morgan Stanley analyst Praveen Choudhary expects Q2 to be the first quarter where mass revenue and EBITDA are closer to pre-COVID levels. The firm has an attractive view on the sector in general, with spending per visitor trends improving, a heavy concert calendar for Q3, and net debt levels on the mend.

For the first half of the year, MGM Resorts ( MGM ) ran up a 32% gain, Wynn Resorts ( WYNN ) rallied 28%, and Las Vegas Sands ( LVS ) was 21% higher. Melco Resorts & Entertainment ( NASDAQ: MLCO ) lagged with just a 6% increase for the first half.

More on casino stocks:

• MGM: A Dip Signals A Buy As Value Scenario Grows With Sector Recovery
• View the growth metrics on Melco Resorts & Entertainment
• View the growth metrics on Las Vegas Sands
• Dig into the Seeking Alpha Quant Rating across the casino sector

For further details see: