UBS research report states that it maintains a positive outlook on Macau's gaming industry, as robust demand since the beginning of the year has reinforced its confidence in the sustainability of gaming revenue growth this year. It maintains its forecast for a 5% year-on-year increase in Gross Gaming Revenue (GGR) for this year, with growth expected to be concentrated in the first half, rising by approximately 8% year-on-year, while the growth rate in the second half is projected to slow to about 3%.
Meanwhile, UBS expects the premium market to continue driving growth, benefiting from expanded marketing efforts, enhanced ancillary services, and optimized reinvestment strategies. Assuming steady demand growth, coupled with a stabilizing competitive environment and increasing emphasis on cost control and reinvestment optimization, profitability pressures are expected to gradually ease.
The bank has lowered its 2026 EBITDA forecast by 2% due to rising operating expenses in the fourth quarter of last year. However, it anticipates that profit margins will remain largely stable this year, leading to an acceleration in year-on-year EBITDA growth adjusted for win rates to approximately 6% (compared to flat year-on-year growth last year).
The bank has comprehensively revised downward its target prices for Macau gaming stocks (details available in a separate table). UBS upgraded its ratings for Sands China (01928.HK) and Melco International Development (00200.HK) from 'Neutral' to 'Buy', lowering their target prices to HKD 20.4 and HKD 5.3, respectively. The top picks in the sector are Melco Resorts & Entertainment (MLCO.US) and Sands China, with the former assigned a target price of USD 9.4 and also receiving a 'Buy' rating.
