Macau Casino Concessionaires Expect 6% Increase in EBITDA for Q4 2023

Macau’s six casino concessionaires are projected to report a 6% rise in aggregate Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for the fourth quarter of 2023. Leading the way in this growth are SJM Holdings and Wynn Macau. Despite rapidly shifting industry trends, analysts believe that 2024 will bring more opportunities than challenges, helping the region regain some of its former shine.

Market Share Shifts Should Not Impact the Broader Industry

According to a recent report by Citi analysts George Choi and Ryan Cheung, Sands China and Galaxy Entertainment have seen a decline in market share. Despite this, rivals such as SJM Holdings and Wynn Macau have benefited from this attrition, resulting in an overall 6% increase in EBITDA for the sector. The experts believe that most of the market share changes in Q4 were driven by luck, and the short-term market share gains will likely translate into more resilient EBITDA margins.

Macau’s combined gross gaming revenue (GGR) for 2023 reached $22.7 billion, showing a significant increase compared to the pandemic-affected period but still below the 2019 high of $36.3 billion. Analysts see potential for the region’s gambling and hospitality sector throughout 2024, contingent on the ongoing adaptations to current economic realities.

Macau Will Attempt to Maintain Its 2023 Momentum

SJM and Wynn Macau are expected to lead the EBITDA improvements in Q4. Both companies have shifted their focus away from VIPs and towards premium mass players, considered a more resilient demographic due to their favorable spending patterns. Despite a challenging 2023 for Macau casino stocks, Citi remains bullish on the sector.

The bank has raised price targets on Melco, MGM China, SJM Holdings, and Wynn Macau while maintaining a positive long-term outlook on Galaxy and Sands China. These ongoing trends reflect the broader challenges and opportunities for Macau as the region attempts to reinvent itself, betting on a more comprehensive leisure experience. The performance of its high-profile casino resorts remains paramount to future success.

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