Zhongjin released a research report stating that it is expected that the total gambling revenue of the Macau gambling industry in the third quarter will increase by 2% quarterly and 17% year-on-year. The full-year industry EBITDA forecast was lowered by 3%, while next year's industry EBITDA forecast was raised by 1%, with both expected to recover to 90% and 106% of the 2019 level respectively. Target price for Sands China (01928) was reduced from HKD 32 to HKD 26.8, based on the impact of the renovation project of Londoner Macao on profitability. The 'Outperform' rating is reiterated for MGM China (02282), with the latest rankings being MGM China, Galaxy Entertainment (00027), Melco Resorts & Entertainment (MLCO.US), Wynn Macau (01128), Sands China, and SJM Holdings (00880).
The bank predicts that the total gambling revenue in Macau for the second quarter will increase by 24% year-on-year, decreasing by 1.6% quarterly, and recovering to 77% of the total gambling revenue for the second quarter of 2019. Among them, the mid-section sector is expected to recover first, with a year-on-year increase of 29% and a quarterly flat growth, equivalent to 112% of the level in the second quarter of 2019; the VIP sector is expected to decrease by 4% year-on-year and 6% quarterly, reaching 23% of the level in the second quarter of 2019. Zhongjin predicts that the industry EBITDA for the second quarter will grow by 23% year-on-year, but will decrease by 1% quarterly to USD 2.02 billion, recovering to 84% of the second quarter of 2019, considering the continued strong performance of the total gambling revenue and a stable environment for reinvestment rate.
Zhongjin believes that MGM China is likely to continue to lead the recovery of the industry's total gambling revenue in the second quarter. In terms of market share, it is expected that Yin Yu and Melco Resorts & Entertainment will benefit from the release of new properties and gain more market share of the total gambling revenue, while Wynn Macau's properties may lose the most of the total gambling revenue and mid-section gambling revenue market share due to positioning and target customers similar to Studio City International and Galaxy Entertainment Phase 3.