According to a Morgan Stanley research report, Macau's total gaming revenue in January this year reached MOP 22.6 billion, representing a year-on-year increase of 24% and a month-on-month rise of 8%, surpassing market expectations. Given that the entire 8-day Lunar New Year holiday fell in February, it is anticipated that the month will benefit from additional growth momentum, with estimated revenue projected to grow by 22% year-on-year.
Morgan Stanley expects Macau’s total gaming revenue in the first quarter of this year to increase by 18% year-on-year, driven by the lower base effect in the first four months of 2025. Although concerns have been raised regarding margin contraction and promotional activities in the fourth quarter of last year, stronger performance in the first quarter should help drive upward revisions in earnings forecasts. The firm also considers the current industry enterprise value multiple (EV/EBITDA) of 8.1x to remain attractive.
Among gaming stocks, Morgan Stanley favors Galaxy Entertainment Group (00027.HK) with an 'Overweight' rating; Sands China (01928.HK), also rated 'Overweight'; and Melco Resorts & Entertainment (MLCO.US), similarly rated 'Overweight'. MGM China (02282.HK) has been assigned a 'Neutral' rating, while SJM Holdings (00880.HK) has received an 'Underweight' rating.
