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2026-11-05 13:58:41 BofA Securities issued a research report discussing the key credit themes for Macau's gaming industry in 2027. The broker expected GGR to remain broadly flat YoY at around 85% of 2019 levels, while visibility on trends remained relatively low. EBITDA is expected to slightly lag behind GGR growth due to intense competition in the premium mass segment, although planned operating expense cuts may provide upside potential. The broker noted that under limited earnings growth, maintaining capital expenditure and shareholder returns could lead some operators to post negative free cash flow. To preserve liquidity, operators are expected to first refinance upcoming USD bonds in the bond market, with lower-cost syndicated loans serving as backup funding. Ratings warrant close attention, particularly for SJM HOLDINGS (00880.HK); flat GGR growth could slow its deleveraging progress compared with rating agencies' expectations, while its relatively high proportion of floating-rate loans makes it the most sensitive to rising interest rates. On the policy front, Macau may tighten enforcement against illegal currency exchange activities, while new Mainland policies targeting high-net-worth individuals or stricter enforcement could affect premium demand, representing key factors to monitor. Looking ahead to next year, BofA Securities forecast industry property EBITDA at around 80% to 85% of 2019 levels, slightly lagging revenue, which is expected to reach about 85% of 2019 levels. GGR is expected to remain broadly flat YoY, while intense competition for premium mass customers may keep reinvestment levels elevated and limit the conversion of revenue into EBITDA. Regarding bond recommendations, the broker assigned an "Overweight" rating to SJMHOL 2028 and 2031 bonds, believing that despite concentrated maturities in 2028, liquidity risks remain manageable and valuations already reflect weak fundamentals and rating downgrade pressure. Cash flow analysis showed that SANDS CHINA LTD (01928.HK), WYNN MACAU (01128.HK) and SJM HOLDINGS (00880.HK) may face free cash flow gaps during 2027-2028 while maintaining capital expenditure and dividend payouts. By comparison, the related entities of MGM CHINA (02282.HK) and MELCO INT'L DEV (00200.HK) are expected to perform relatively better and likely record positive figures. The six operators have agreed to contribute a combined MOP9 billion to the government's new guidance fund, to be paid in equal installments over three years. The broker believes the cash flow impact should remain manageable as the payments will be included in existing non-gaming concession commitments. (da/ad)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |