[ET Net News Agency, 2 March 2020] Morgan Stanley said Macau's February GGR (gross
gaming revenue) of MOP3.1bn was (down 88%) worse than its estimate. Assuming the casinos
were closed for 15 days, daily GGR for the remaining days in February would have been
MOP222m, although the research house estimated that GGR over the last ten days was much
lower than in the first five days of February.
Morgan estimated that VIP declined less than mass.
For March, the consensus expectation is for a 75% decline, which implies GGR of MOP6.4bn
or MOP208m daily. This also implies 1Q GGR of MOP31.7bn (-58% YoY) and could easily mean
that almost all companies could be barely breaking even at the EBITDA level in this
quarter.
Morgan sees a further risk of cuts to consensus earnings estimates. The industry is
trading at 16x 2020 (depressed earnings) and 10x 2021 EV/EBITDA. Morgan said 2021's
multiple may look cheap, but it does not reflect the likelihood of earnings estimate cuts
in the near term. (KL)