Melco Resorts Q2 EBITDA Reinvestment Likely Weak

JP Morgan Securities LLC lowered its earnings before interest, taxation, depreciation and amortization (EBITDA) estimate for Melco Resorts & Entertainment, Inc. in the second quarter of 2024.

The agency currently expects Melco Resort’s property-level EBITDA to be $336 million, down from its previous estimate of $313 million. Of the latest quarterly group-wide property-level EBITDA estimate of $313 million, JPMorgan expects $260 million at the casino company’s Macau operations.

Melco Resorts operates casino resorts City of Dreams, Studio City, and Altira in the Macau market under the “Mocha Club” brand.

The company also operates a property in the Philippine capital Manila and a gaming venue on the Mediterranean island of Cyprus. The group announced its investment in a casino resort in Sri Lanka’s capital Colombo in April, with gaming operations expected to “start in mid-2025.”

“While Melco likely grew its table gross game sales (GGR) market share in the second quarter of 2024 from about 14% quarter to about 15% quarter-over-quarter, this result falls short of previous GGR forecasts and is likely due to higher premium bulk promotion/reinvestment activities, resulting in lower net profit conversion and weaker EBITDA,” analysts Joseph Greff, Ryan Lambert and Samuel Nielsen wrote in a note on Thursday.

They added: “We believe most U.S.-focused Macau operators will save MGM by reporting their Macau Q2 EBITDA results for 2024 as mostly uninspiring.”

The casino operator reported a 1.5% sequential decline in adjusted real estate EBITDA for the first quarter to $298.8 million. This was an operating profit of $1.11 billion, up 1.8% from the previous quarter.

JPMorgan expects Melco Resort’s group-wide real estate EBITDA to be approximately $1.29 billion for 2024, down 5.1% from its previous estimate. For Melco Resort’s Macau business, JPMorgan forecasts real estate EBITDA level to $1.08 billion this year, down 3.0% from its previous forecast.

The brokerage expects the casino company to generate group-wide real estate EBITDA of $1.36 billion next year, down 4.9% from its previous estimate. Macau real estate level EBITDA is expected to be $1.14 billion in 2025, down 4.5% from its previous estimate.

“Previously, we thought Melco’s Macau EBITDA trajectory would be more robust given its easy year-over-year comparison and new property-level management that would produce stronger short-term results, and while we acknowledged that this change is still very early because it is less than six months old, we still see Melco as a proof-of-results stock, in addition to fighting current negative investor sentiment in Macau stocks due to macro and geopolitical concerns,” the JPMorgan team said.

BY: 홀짜게임

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