Morgan Stanley released a research report stating that Macau gaming stocks have risen by 51% in the past month, leading to a revaluation and a multiple rebound to early-year levels. Since October, the number of visitors to Macau has been strong, bringing positive prospects to the industry. However, the consistent negative revision of EBITDA for 2024/2025 is still a downside. Morgan Stanley stated that they are more bullish on Sands China (01928) compared to Galaxy Ent (00027). They also predict that SJM Holdings (00880) will rise in the third quarter.
The bank believes that Macau gaming industry's EBITDA in the fourth quarter will grow by 4% compared to the previous quarter. There are downside risks in the EBITDA forecast of Galaxy Ent in the fourth quarter and in 2024, while Wynn Macau (01128) and SJM Holdings carry smaller risks. Looking ahead to 2025, Morgan Stanley points out that if the third quarter of 2024 is multiplied by four and compared with market consensus forecasts for 2025, Galaxy Ent, Melco Resorts and Entertainment, and MGM China (02282) are facing bigger downside risks in the 2025 market consensus EBITDA as they need over 20% growth. However, Sands China may start to see improvements from the third quarter.
