"deleveraging to take some time" (and dividends)
nov24
Macau gaming operator SJM Holdings may only resume dividend payments in 2026, as its top priority remains deleveraging, according to a report from Morgan Stanley.
The information follows the Asia Pacific Summit 2024, where the Morgan Stanley research team met with SJM Holdings’ management.
Morgan Stanley notes that, despite expectations for SJM’s net income to turn positive in 2024, the company’s dividend policy is closely tied to its efforts to reduce debt.
With net debt still at a high level, SJM aims to reduce its net debt-to-EBITDA ratio to 5x over the next 18 months.
As of the end of the third quarter of 2024, SJM’s net debt-to-hold-adjusted EBITDA stood at 6.5x, and the company has projected capital expenditures of approximately HK$1 billion ($129 million) per year from 2024 to 2026.
While the company is expected to return to profitability in 2024, with third-quarter net income turning positive at HK$101 million ($13 million), compared to a loss of HK$60 million ($7.7 million) in 9M24, Morgan Stanley believes that the resumption of dividends will be slower than that of its peers.
https://agbrief.com/news/macau/25/11/2024/sjm-to-resume-dividend-payments-only-in-2026-morgan-stanley/?utm_source=Asia+Gaming+Brief&utm_campaign=63575ab906-AGB%3A+%2302032+Monday%2C+25th+November%2C+2024_COPY_01&utm_medium=email&utm_term=0_51950b5d21-63575ab906-%5BLIST_EMAIL_ID%5D&ct=t%28AGB%3A+%2302032+Monday%2C+25th+November%2C+2024_COPY_01%29&goal=0_51950b5d21-63575ab906-%5BLIST_EMAIL_ID%5D&mc_cid=63575ab906&mc_eid=31e20475e6
nov24
Casino group Melco Resorts & Entertainment Ltd aims to resume dividend payment to shareholders in the second half of 2025, said on Tuesday the firm’s management on the call to discuss its third-quarter earnings.
“We would like to return to being a dividend-paying company,” stated Geoff Davis, Melco Resorts’ executive vice president and chief financial officer. “We think it’s potentially possible in the second half of next year.”
The firm last paid a dividend in February 2020.
https://www.ggrasia.com/melco-resorts-eyes-resuming-dividend-payment-in-2h2025/
ago24
MGM China’s dividend yield for the fiscal year 2024 appears to be the highest in Macau and among all listed casino companies worldwide, as per J.P. Morgan analysts.
It is according to a recent note written by DS Kim, Mufan Shi and Selina Li on the casino operator’s Thursday announcement of a special dividend of HK$0.353 (US$0.045/MOP0.36) per share.
According to the MGM stock filing, the payment of the dividend amounts to an aggregate of HK$1,341 million.
The casino operator reported a 47.5 percent year-on-year increase in casino revenue to HK$14.16 billion for the first half of the year.
https://www.macaubusiness.com/mgm-offers-highest-dividend-yield-among-global-casino-operators/4
ago24
Macau’s Galaxy Entertainment Group on Wednesday issued a clarification to its dividend policy following reports in Hong Kong media claiming the company had not declared a Special Dividend since 2004.
A week after releasing its 2Q24 financial results and declaring an Interim Dividend of HK$0.50 per share, GEG pointed to some “ambiguity” in the Hong Kong media reports about its dividend history, noting that it had received some investor inquiries regarding such dividends payments.
“We wish to clarify that from July 2014, GEG has consistently paid two dividends per year,” the company explained.
“One dividend following the close of the half year and a second dividend following the close of year end. The only exception to this practice was during the period of COVID where due to the uncertainly of reopening dates, dividends were temporarily suspended.
“It should be noted that post-COVID reopening, GEG was the first Macau Concessionaire to recommence paying dividends. It should also be noted that GEG most recently announced dividend was HK$0.50 per share compared to the previous dividend of HK$0.30 per share, which represents a 66% increase in dividend payment.”
GEG also published a list of all dividends it had paid over the past 10 years, which show last week’s HK$0.50 Interim Dividend is the highest dividend per share paid since declaring a HK$0.70 dividend in July 2014.
https://www.asgam.com/index.php/2024/08/21/galaxy-clears-up-media-ambiguity-over-companys-dividend-policy/
Apr24
HSBC Global Research predicts that MGM China, Wynn Macau, Galaxy, and Sands China will pay dividends in 2024, while Melco and SJM are likely to withhold dividends.
In a recent report on HSBC Global Investment Summit 2024 key takeaways, the financial services agency said that Macau’s gaming demand remains healthy, while gaming operators “remain committed to shareholder returns”.
Analysts Charlene Liu, Jessie Lu, and Lauren Cai maintain a ‘buy’ rating for MGM China and Galaxy, noting that both operators observed positive trends across all business segments, with notable upticks in VIP segment.
“With growing offerings of non-gaming events of a different nature, both[operators] expect to see travellers return more often to Macau and the seasonality trend to smoothen out,” the analysts said.
https://www.macaubusiness.com/four-macau-gaming-operators-likely-to-pay-dividends-in-2024-hsbc/
aprov24
MGM China has warned in a recent report that its ‘high indebtedness’ could ‘pose challenges’ for the operator to meet its obligations regarding unsecured notes.
At the same time, it could increase the group’s susceptibility to economic downturns, while hindering future financing efforts and require a significant portion of cash flow for debt servicing.
As of the end of December 2023, MGM China held HK$19.1 billion ($2.44 billion) in net debt, including borrowings, net of debt finance costs, and pledged bank deposits. By the same period, MGM held HK$24 billion ($3.06 billion) in unsecured senior notes and credit facilities.
https://agbrief.com/news/macau/10/04/2024/high-indebtedness-could-pose-future-repayment-challenges-mgm-china/?utm_source=Asia+Gaming+Brief&utm_campaign=84d103b232-AGB%3A+%2301877+Thursday%2C+11th+April%2C+2024&utm_medium=email&utm_term=0_51950b5d21-84d103b232-%5BLIST_EMAIL_ID%5D&ct=t%28AGB%3A+%2301877+Thursday%2C+11th+April%2C+2024%29&goal=0_51950b5d21-84d103b232-%5BLIST_EMAIL_ID%5D&mc_cid=84d103b232&mc_eid=31e20475e6
apr24
Contudo, no primeiro trimestre de 2024, o crescimento do EBITDA terá sido inferior à subida trimestral de 6% registada nas receitas brutas do jogo, “sugerindo uma desalavancagem operacional”, referiram os analistas Praveen Choudhary, Gareth Leung e Stephen Grambling no novo relatório do Morgan Stanley, atentos ao facto das operadoras estarem focadas na redução dos seus níveis de endividamento. Segundo a Direcção de Inspecção e Coordenação de Jogos, a facturação dos casinos saltou de 54,11 mil milhões de patacas no quarto trimestre de 2023 para 57,33 mil milhões nos primeiros três meses deste ano.
“Acreditamos que neste trimestre [primeiro de 2024] veremos menores benefícios da alavancagem operacional devido às subidas salariais, e algumas empresas a aumentarem as promoções para atrair clientes”, escreveram os analistas do grupo bancário.
https://jtm.com.mo/local/operadoras-de-jogo-focadas-na-reducao-da-divida/
mar24
MGM China and Wynn Macau Ltd provided quite the surprise last week by declaring dividends for the first time in over four years, but fellow Macau concessionaires Melco Resorts and SJM Resorts are unlikely to follow suit anytime soon, according to investment bank JP Morgan.
In a Friday note, analysts DS Kim, Mufan Shi and Selina Li observed that three out of the six concessionaires are now paying dividends – Galaxy Entertainment Group being the first to do so last year. They also predict Sands China to join the party by way of a FY2024 dividend to be paid in 2025, but Melco and SJM “may prioritize deleveraging for some time.”
https://www.asgam.com/index.php/2024/03/24/jp-morgan-melco-sjm-unlikely-to-follow-lead-of-macau-peers-by-reinstating-dividends-anytime-soon/
mar24
In what a brokerage described as “a surprise”, two Macau casino operators respectively announced on Thursday annual dividends for the first time since the 2019 trading year preceding the Covid-19 pandemic.
The dividend move was “a year earlier than… the Street [investment community] had expected,” said JP Morgan Securities (Asia Pacific) Ltd in a Friday note.
“This means three out of six [Macau] operators are now paying dividends, including Galaxy [Entertainment Group Ltd] and we expect Sands [China Ltd] to follow suit next year… while Melco [Resorts & Entertainment Ltd] and SJM [Holdings Ltd] may prioritise deleveraging for some time,” wrote analysts DS Kim, Mufan Shi, and Selina Li.
MGM China Holdings Ltd flagged a final dividend for 2023 of HKD0.243 (US$0.0307) per ordinary share, payable on June 20, subject to approval by its annual meeting.
The company – which runs the MGM Macau and MGM Cotai properties – also declared a special dividend of HKD 0.104 per share, payable on April 12.
The two dividends combined represented 50 percent of the 2023 profit attributable to the owners of the firm, said MGM China.
Wynn Macau Ltd – operator of the Wynn Macau and Wynn Cotai casino resorts – announced a 2023 final dividend of HKD0.075 per share, payable on June 19.
https://www.ggrasia.com/dividends-surprise-from-mgm-china-wynn-macau-ltd-jpm/
mar24
Five out of six gaming operators in Macau are unlikely to resume dividends by 2025, though Sands China and MGM China seem to be in a better position than others, according to calculations by Morgan Stanley.
Galaxy Entertainment Group (GEG) was the first operator to announce the resumption of dividends at the early stage of the Macau recovery.
In an investment memo published after meeting with Macau concessionaires, Morgan Stanley indicates that Sands China and MGM perform better on the net gearing ratio, and most operators should have negative retained earnings, while Sands China, Wynn, and MGM perform better in net profit recovery.
Analysts note that deleveraging is still a priority, while in some cases, gaming companies’ retained earnings are not positive.
In the case of Sands China, Sands China finalized a facility agreement worth $2.49 billion with lenders in May last year, which includes an 18-month extension of their dividend-restriction period. The dividend restriction period, initially set to end on July 31st, 2023, is now extended to January 1st, 2025.
In the previous investment memo, Fitch believed Sands China would only resume its dividend in 2026.
https://agbrief.com/news/macau/18/03/2024/macau-operators-dividend-delay-deleveraging-still-a-priority/?utm_source=Asia+Gaming+Brief&utm_campaign=22a6a6184b-AGB%3A+%2301863+Tuesday%2C+19th+March%2C+2024&utm_medium=email&utm_term=0_51950b5d21-22a6a6184b-%5BLIST_EMAIL_ID%5D&ct=t%28AGB%3A+%2301863+Tuesday%2C+19th+March%2C+2024%29&goal=0_51950b5d21-22a6a6184b-%5BLIST_EMAIL_ID%5D&mc_cid=22a6a6184b&mc_eid=31e20475e6
fev24
A agência de notação financeira Fitch Ratings disse hoje esperar que o setor do jogo em Macau apresente melhorias este ano, apoiadas pela recuperação turística, embora a redução da dívida de operadoras de casino "leve tempo".
Ratings agency Fitch described on Thursday as “constrained” the likelihood of any further upside potential to the ratings of Macau’s concessionaires, with deleveraging expected to take time for some operators.
That’s despite the agency offering a positive outlook for 2024, when it expects a 15% increase in Macau’s economic output and a significant reduction in debt by most concessionaires.
In a note, Fitch said it expects Macau’s gaming industry to improve in 2024, bolstered by a steady recovery in inbound tourism, which was “particularly evident” during the recent Chinese New Year holiday period.
It also cited a clear shift in Chinese consumer preferences towards service-oriented sectors, like domestic tourism and entertainment, which has helped shield Macau from the impact of China’s economic downturn.
However, having recently revised upwards the ratings of both SJM Holdings and Sands China parent Las Vegas Sands, Fitch explained that any further positive ratings action was unlikely in the short-term.
“The upswing in visitation and gaming revenue is likely to aid Fitch-rated casino operators with a presence in Macau in reducing their debt levels,” the agency wrote. “However, upside potential in their ratings is constrained by their elevated leverage metrics, as deleveraging will take time for some of the operators, despite the improvements.”
It added, “We do not see significant further upside potential in the issuers’ ratings in the near term, as reflected by their Stable Outlooks. SJM’s leverage metric, in particular, remains high and is likely to fall to its rating thresholds only in 2026, in our view. There is also a risk that the recovery in Macau’s gaming revenues could be slowed by possible policies to tighten capital outflow from the Chinese mainland.”
https://www.asgam.com/index.php/2024/02/22/fitch-macau-recovery-to-help-concessionaires-reduce-debt-but-deleveraging-to-take-some-time/
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