According to a JPMorgan research report, Macau's total gross gaming revenue (GGR) for February increased by 4% year-on-year to MOP 20.6 billion, with an average daily revenue of MOP 737 million, surpassing both market and the firm's expectations. More importantly, driven by strong demand from premium customers in the latter part of the month, the average daily revenue in the last week of February reached approximately MOP 1 billion, compared to the relatively muted performance during the Lunar New Year holiday. However, the bank attributed the subdued Lunar New Year performance primarily to timing factors, as this year's peak Spring Festival period occurred later than usual, rather than reflecting weak underlying demand.
After incorporating February’s data, GGR in the first two months of the year grew by 14% year-on-year, recovering to 86% of pre-pandemic levels, consistent with the robust growth momentum seen in the second half of last year. Nevertheless, the bank believes that March’s GGR performance is unlikely to act as a catalyst for industry stock prices, as investors’ focus has shifted towards profit margins and EBITDA growth. While there are early signs of quarter-on-quarter improvement, the bank still advises maintaining selectivity.
Within the industry, the bank is most bullish on Galaxy Entertainment Group (00027.HK), with a target price of HKD 52; followed by Sands China (01928.HK) and MGM China (02282.HK), with target prices of HKD 22 and HKD 18, respectively. Wynn Macau (01128.HK) has a target price of HKD 8, and all these stocks have received an "Overweight" rating. In contrast, SJM Holdings and Melco International Development have been given a "Reduce" rating, with target prices of HKD 2 and HKD 3.5, respectively.
