Studio City International: Rolling The Dice In Macau's Jackpot Jungle

2025-03-17 02:08:39 ET

Summary

• Macau's gaming revenue reached $28.35 billion, 2.07x larger than Las Vegas, driven by high rollers from Mainland China, with Studio City offering family-friendly entertainment options.
• MSC faces profitability issues despite revenue growth; EBIT was $38.1 million, much lower than pre-pandemic margins, and net loss was $96.7 million.
• The casino's high leverage and competition in Macau, combined with slower-than-expected growth, pose significant risks; self-funding is crucial to avoid further dilution.
• Recommendation: 'Hold' on Studio City due to potential upside if pre-pandemic metrics return, but risks from Macau's market and economic slowdown make it a cautious investment.

A Fight in the Land of Casinos

If you're all about that gambling thrill, chances are you've already taken a spin on the legendary slot machines in Las Vegas and Atlantic City. But what you may not know is that the gambling capital is over 7,000 miles from Nevada!

I'm talking about Macau, a SAR of China, a former Sino-Portuguese colony.

To give you an idea of ??how the wheels are spinning there, in 2024, gaming revenue there was $28.35 billion, growing about 23.9% year over year....

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