Xiaomo: Macau's gaming revenue is expected to rise 19% year over year in the fourth quarter and remains the preferred Galaxy Entertainment (00027)

The Zhitong Finance App learned that J.P. Morgan Chase released a research report saying that the data showed that Macau's total gaming revenue for the first seven days of December was 5.2 billion patacas (same below), an average of about 742 million yuan per day, up more than 5% from November, and an increase of more than 25% over the same period last year, although the base figure is low. Under an optimistic scenario, if the increase continues until the end of the month, total gaming revenue for the fourth quarter of this year may rise 18% to 19% year on year, up 8% to 9% from quarter to quarter, reaching a six-year high, which is significantly higher than the bank's and market expectations of 13% to 14%. The bank believes that the current valuation of the industry is extremely low. The ratio of EVs to EBITDA in 2026 is 9 times, which is 13 times lower than the historical average. The bank estimates that for every doubling of the valuation multiplier, the equity value can increase by more than 15%; under the most optimistic circumstances, if the valuation fully returns to the historical average, the total market value of the sector is expected to increase by more than 60%.

In terms of shares, the bank is optimistic about Sands China (01928) in the short term because it is expected that the company will announce an increase in dividends for 2026 at the end of February, and the company's market share and profit share for the fourth quarter are expected to increase; the target price is HK$24.5, and the rating is “increased holdings.” In the long run, Galaxy Entertainment (00027) remains the preferred choice because the company has both strong value and long-term growth potential, and the fourth phase of the development project may be reflected in the stock price starting next year; the target price of HK$50 also received an “increase” rating. Meanwhile, the bank continues to suggest avoiding Melco International Development (00200) and Aobo Holdings (00880), giving them “reduced holdings” and “neutral” ratings respectively.