JPMorgan released a research report stating that the Target Prices for SJM HOLDINGS (00880) and MELCO INT'L DEV (00200) have been lowered to HKD 2.5 and HKD 4.1, with ratings of "Neutral" and "Shareholding". The firm also reduced the Target Prices for WYNN MACAU and SANDS CHINA to HKD 7.5 and HKD 21.5 respectively, maintaining a "Shareholding" rating.
The report states that last year's fourth quarter performance of Macau's Gambling revenue was the best in 20 consecutive quarters, and currently, the Industry is undervalued, at about 9 times the average EBITDA. Therefore, attention is focused on individual stock alpha investment opportunities, with GALAXY ENT (00027) continuing to be listed as the top pick, followed by MGM CHINA (02282). It is believed that MGM CHINA's market share and EBITDA growth in the last year's fourth quarter could outperform its peers.
Currently, JPMorgan maintains its stock selection order for the gambling sector as GALAXY ENT, MGM CHINA, WYNN MACAU (01128), SANDS CHINA (01928), and SJM HOLDINGS (00880) and MELCO INT'L DEV. Various Gambling operators will announce their fourth quarter results from the end of this month to early March. JPMorgan predicts an industry EBITDA growth of 2% to 3% quarter-on-quarter, with profit margin expected to remain stable. It is anticipated that GALAXY ENT and MGM could be the winners, with market share improving by 0.9 and 0.8 percentage points respectively, while SANDS CHINA and SJM HOLDINGS will be the losers in market share.
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