Melco sees turnaround on improved Macau performance
In Macau, Melco beat third-quarter estimates and kicked off a strong fourth quarter, thanks to Golden Week visitation, which drew more than 993,000 people to the gaming hub, rivalling pre-pandemic numbers.
According to Macau Business, Melco’s flagship City of Dreams recorded three of its best mass-table drop days of all time during the national holiday, 1-7 October. CoD sister property Studio City enjoyed four of its best days for mass table drop during the same period.
Melco also operates City of Dreams Manila in the Philippines, which opened in 2015. Last year, it opened City of Dreams Mediterranean in Limassol, Cyprus, which the company describes as “the first integrated resort in Europe.” That property has been a slow starter, though revenue – including three satellite casinos in Cyprus – jumped 20.6% to $64.4 million in Q3.
The Hong Kong-based operator is currently developing a new casino resort, City of Dreams Sri Lanka. Phase 1 of the project debuted 15 October, with the opening of the Cinnamon Life luxury hotel. Phase 2 will add a casino and additional non-gaming amenities.
By the numbers
Companywide, total operating revenues for Q3 came to $1.18 billion, up 16% from $1.02 billion during the same period in 2023. Casino gaming accounted for $944.4 million of that total, with a further $111.0 million coming from room revenue. Food and beverage revenue added another $73.5 million, with $46.3 million generated from entertainment and retail offerings across its properties.
Operating income totalled $138.6 million, compared to $94.7 million last year.
Earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $322.5 million compared to $280.6 million in 2023. Net income was $27.3 million, reversing a net loss of $16.3 million last year.
Melco chairman and CEO Lawrence Ho credited “initiatives to activate areas throughout our properties and drive visitation.”
Those initiatives include the new Signature Club for premium-mass players and an upgraded loyalty programme with exclusive benefits. “This renewed loyalty programme is starting to show the benefits of increasing efficiency in our player reinvestment,” Ho said.
The company has also introduced a premium slot area at City of Dreams and the new Dragon Zone slot floor at Studio City, in partnership with Aristocrat Gaming. It is also installing new “smart tables”, equipped with radiofrequency identification technology (RiFD), at baccarat tables at Studio City, according to Macao News.
Finally, Melco has installed a “new light tunnel entrance complemented by live performances” at City of Dreams to dazzle incoming patrons, Ho said. “We expect to continue to unveil new and exciting projects to support the ongoing growth in Macau.”
On the upswing
CBRE Equity Research analyst John DeCree says the positive results suggest an upward trend for Melco in the Chinese gaming hub. Melco is “upping its game in Macau, with a renewed focus on its highest-value customers,” said DeCree, per investment website Seeking Alpha. The renewed momentum should grow with the addition of more RFID-enabled tables.
Overall, the results justify Ho’s optimism in the company’s Q2 earnings call. At the time, he said, “We’ve seen growth in GGR quarter-to-quarter and year-over-year. And our teams are focused on driving continued expansion of our market position.”
Capex is expected to reach $400 million for 2024, with $70-$75 million for COD Sri Lanka.
According to NASDAQ.com, Melco stock currently has a “buy” rating from Zacks Rank, “indicating that it could outperform the broader market in the near term”.