Nomura: MGM China, Wynn, and Melco are biggest Q3 winners

TAGs: Melco Crown Entertainment, MGM China, Nomura, wynn macau

Japanese credit debt watcher Nomura is predicting significant gains for Macau-based casino operators MGM China Holdings Ltd, Melco Resorts and Entertainment Ltd and Wynn Macau in the third quarter of 2017.

Nomura: MGM China, Wynn, and Melco are biggest Q3 winnersNomura made its predictions ahead of next week’s market call when most of gaming operators release their third quarter revenue reports, according to GGRAsia.

In a note on Thursday, Nomura said these three casino operators will have positive third quarter earnings as it has taken into account Macau’s gross gaming revenue for the July to September 2017 period, which was up 22 percent.

Nomura said that Wynn Macau likely claimed the biggest VIP revenue last quarter, while notching earnings before interest, taxation, depreciation and amortization (EBITDA) of $305 million.

“We assume Wynn [Macau Ltd] gains around 60 basis points of GGR share in the third quarter driven by a 60 basis point lift in VIP revenue share and 10 basis points in mass,” Nomura said.

Both Melco and MGM China, meanwhile, are likely to dominate the mass market segment quarter-on-quarter after each operator gained approximately 100 basis points, according to the international ratings agency.

Nomura pointed out that MGM Macau may have generated $131 million of EBITDA in the 92-day period starting July 2017. As an added bonus, Nomura also expressed confidence that the new MGM Cotai will have a strong opening early next year.

In the case of Melco, Nomura said that the Lawrence Ho-led business has “gained around 10 basis points of sequential [overall] GGR share in the [third] quarter, to around 16.4 percent from 16.3 percent in the second quarter of 2017.” Melco will likely post $303 million in EBITDA for its Macau portfolio in the third quarter.

As for their competitors, analysts from Nomura said: “All other operators should report flat to down sequential GGR share.”

Nomura noted that Sands China Ltd. is losing market share for the third consecutive quarter. It predicted that Sands China garnered a total EBITDA of $638 million in the third quarter.

“The key question is if [Sands China] can stabilise its market share in Macau while facing new competition from MGM Cotai and Melco Resorts/Morpheus, which we doubt,” the brokerage added.


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