{"id":207100,"date":"2022-03-29T09:59:07","date_gmt":"2022-03-29T16:59:07","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=207100"},"modified":"2022-03-29T12:51:11","modified_gmt":"2022-03-29T19:51:11","slug":"macau-casino-operators-dealing-with-cash-concerns","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/macau-casino-operators-dealing-with-cash-concerns\/","title":{"rendered":"Macau Casino Operators Facing Another Cash Crunch, Say Analysts"},"content":{"rendered":"

Reminiscent of the early days of the coronavirus pandemic, some casino operators in Macau are running low on cash. Morgan Stanley analysts estimate some will survive just months at current burn rates.<\/p>\n

\"Macau
Several casinos at night in Macau, seen above. Morgan Stanley says operators there are facing cash crunches. (Image: Bloomberg<\/em>)<\/figcaption><\/figure>\n

The bank says concessionaires in the world\u2019s largest casino hub are losing $800 million on a quarterly basis and burning through $250 million in free cash flow. Grand Lisboa operator SJM Holdings appears to be the worst in terms of capital needs, as it could expend its cash in just three months. That assessment doesn\u2019t account for the company\u2019s access to a $170 million credit facility, according to Morgan Stanley.<\/p>\n

Survival is key in this stage,\u201d<\/strong> note Morgan Stanley analysts Praveen Choudhary, Gareth Leung and Thomas Allen. \u201cOf course, companies can raise new debt, but current bond yield suggests it will be expensive.\u201d<\/strong><\/p><\/blockquote>\n

At the other end of the spectrum is Galaxy Entertainment, which the analysts say is the one of the six Macau operators without imminent cash needs. That company has $5 billion in cash on hand.<\/p>\n

Where Other Operators Fit In<\/h2>\n

Morgan Stanley\u2019s gloomy assessment on the potential capital needs of Macau concessionaires is the second this month. It arrives less than two weeks after the bank said debt burdens among the operators are ballooning<\/a> since the start of the pandemic.<\/p>\n

Prior to the global health crisis, the concessionaires had just $5 billion in combined liabilities. But that figure has since risen to $20 billion, and is on pace to eclipse $23 billion by the end of this year.<\/p>\n

\n

The bank adds that Sands China and MGM China have about three quarters (nine months) worth of capital to survive at current burn rates. However, it\u2019s not clear if that assessment factors in the influx of cash Las Vegas Sands (NYSE:LVS) is commanding through its recently completed sale of its Las Vegas assets<\/a>. Additionally, MGM China parent MGM Resorts International (NYSE:MGM) has one of the industry\u2019s strongest balance sheets<\/a>.<\/p>\n<\/div>\n

Morgan Stanley points out Wynn Macau and Melco Resorts & Entertainment (NASDAQ:MLCO) have enough capital to survive 15 and 18 months, respectively, at current burn rates.<\/p>\n

Selling Debt Not Appealing Option<\/h2>\n

Operators could sell debt to raise cash, but that\u2019s not an appealing option, with many saddled with non-investment grade credit ratings. For example, Standard & Poor\u2019s last month lowered its grades<\/a> on LVS and the operator\u2019s Sands China unit to \u201cBB+,\u201dor one notch into junk territory, from \u201cBBB-.\u201d<\/p>\n

Likewise, selling equity dilutes current investors, and is likely to be met with derision among investors at a time when shares of Macau operators are sagging.<\/p>\n

\u201cThe total market cap of Macau stocks at US$58 billion is still close to the all-time low (and similar to January 2016),\u201d <\/strong>say the Morgan Stanley analysts.<\/p>\n","protected":false},"excerpt":{"rendered":"

Reminiscent of the early days of the coronavirus pandemic, some casino operators in Macau are running low on cash. Morgan Stanley analysts estimate some will survive just months at current burn rates. The bank says concessionaires in the world\u2019s largest casino hub are losing $800 million on a quarterly basis and burning through $250 million […]<\/p>\n","protected":false},"author":46,"featured_media":207104,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[69069,10],"tags":[],"acf":[],"yoast_head":"\nMacau Casino Operators Dealing With Cash Concerns<\/title>\n<meta name=\"description\" content=\"Macau casino operators are burning through lots of cash, according to Morgan Stanley.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/macau-casino-operators-dealing-with-cash-concerns\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Macau Casino Operators Dealing With Cash Concerns\" \/>\n<meta property=\"og:description\" content=\"Macau casino operators are burning through lots of cash, according to Morgan Stanley.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/macau-casino-operators-dealing-with-cash-concerns\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2022-03-29T16:59:07+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-03-29T19:51:11+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/03\/macau-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"800\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/macau-casino-operators-dealing-with-cash-concerns\/\",\"url\":\"https:\/\/www.casino.org\/news\/macau-casino-operators-dealing-with-cash-concerns\/\",\"name\":\"Macau Casino Operators Dealing With Cash Concerns\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-casino-operators-dealing-with-cash-concerns\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-casino-operators-dealing-with-cash-concerns\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/03\/macau-1.jpg\",\"datePublished\":\"2022-03-29T16:59:07+00:00\",\"dateModified\":\"2022-03-29T19:51:11+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Macau casino operators are burning through lots of cash, according to Morgan Stanley.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-casino-operators-dealing-with-cash-concerns\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/macau-casino-operators-dealing-with-cash-concerns\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/macau-casino-operators-dealing-with-cash-concerns\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/03\/macau-1.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/03\/macau-1.jpg\",\"width\":1200,\"height\":800,\"caption\":\"Casinos in Macau. Morgan Stanley says operators there are facing cash crunches. 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