According to Morgan Stanley, there are currently no short-term catalysts to drive stock price revaluation, and investors should focus on long-term bullish factors or special opportunities around performance adjustments.
According to the research report released by Morgan Stanley, the preference order of Macau casino stocks has not changed, and it is still MGM China (02282), Wynn Macau (01128), Sands China (01928), Galaxy Entertainment (00027), SJM Holdings (00880) and Melco Resorts and Entertainment (MLCO.US).
The bank pointed out that the casino revenue for the first 14 days of July amounted to MOP 8.3 billion, or MOP 0.593 billion per day. The daily casino revenue for the second week rose by 15% to MOP 0.635 billion per day, mainly due to the gradual reflection of summer demand. With the end of the European Cup in the early hours of Monday, Hong Kong time, and the upcoming summer peak in the next few weeks, casino revenue is expected to gradually improve.
By segmenting the market, the bank expects that the mid-range casino revenue in this month to date will be 105% to 110% of the pre-epidemic level, while the VIP room will be around 20% to 26%. Due to the slow start of the month, the bank expects that the casino revenue in Macau in July will be around MOP 18.5 billion, lower than the initial market expectation of over MOP 19 billion.
Morgan Stanley believes that Macau casino stocks are undervalued, especially considering that a large portion of the companies engaged in the consumer and leisure industry in mainland China face limited risks. However, the bank pointed out that there are currently no short-term catalysts to drive stock price revaluation, and believes that investors should focus on long-term bullish factors or special opportunities around business performance adjustments.