S&P Global Ratings states that Macau gaming operator Melco Resorts & Entertainment Ltd. is on track for an accelerating recovery path, with its property EBITDA expected to return to 2019 levels by 2025.
In a non-ratings commentary, S&P assumes the company’s EBITDA will recover to 94 percent of 2019 levels in 2024 and 7 percent higher than 2019 levels in 2025. This compares with about a 75 percent level in the fourth quarter of 2023.
“Melco’s EBITDA recovery will likely support its deleveraging to close to pre-pandemic levels over the next 12-24 months. Strong trends in Macau’s mass gaming market are fueling this recovery,” the research team indicates.
The ratings agency also points out that higher visitor arrivals and hotel expansion will power mass-market growth in Macau. ‘China’s inclusion of Xi’an and Qingdao in the individual visit scheme from March 6 will likely further boost visitors to Macau.’
S&P Global estimates that Macau’s mass gross gaming revenue (GGR) was up 12-13 percent from 2019 levels in the first two months of 2024. This trend is at the higher end of our 5-15 percent growth forecast for 2024, compared with 2019 levels.
The company’s EBITDA recovery could accelerate in the coming quarters. Solid mass gaming trends and incremental contributions from Studio City Phase 2 will likely support this. During the recent Chinese New Year holiday, the company’s mass GGR was up 22 percent from 2019 levels, as the company benefited from Chinese arrivals.
