In a significant market rebound, shares of Macau’s gaming operators surged an average of 23.7 percent over the past week, following the announcement of China’s most comprehensive stimulus package since the pandemic began, CBRE analysts commented in a recent dispatch.
Despite this rally, Macau gaming equities have struggled over the past year, underperforming the S&P 500 index.
Analysts note that current valuations and forward estimates for the sector remain attractive, suggesting further upside potential.
While some investors are considering taking profits, experts recommend a more bullish approach toward Macau investments. Even after last week’s surge, CBRE stated that the average one-year forward EV/EBITDA multiple for Macau gaming stocks stands at 9.2x, significantly lower than the group’s 2019 average of 11.2x.
Consensus estimates project a revenue growth of 7.3 percent for Macau in 2025, a figure that may prove conservative if the newly introduced stimulus measures successfully bolster economic activity.
China’s latest stimulus initiative marks a departure from previous measures, characterized by aggressive monetary policy changes including simultaneous cuts to short-term benchmark rates and the Reserve Requirement Ratio (RRR).
This is the first such move since 2015 and signals a renewed appetite for credit in the country.
The package also features reductions in residential mortgage rates and the lifting of purchase restrictions, aimed at stabilizing home prices. As real estate constitutes approximately 70 percent of household wealth in China, strengthening this sector is crucial for boosting consumer confidence and stimulating domestic consumption.
The recent measures have primarily focused on supply-side economics, with expectations of forthcoming fiscal stimulus aimed directly at enhancing demand.
CBRE argued that market analysts believe this stimulus package serves as a green light for investment in Macau’s gaming sector.
While all operators are expected to benefit, shares of Las Vegas Sands (LVS) and Wynn Resorts are particularly favored.
LVS, which boasts the largest hotel inventory and retail presence in Macau, is well-positioned to capitalize on increased demand and visitor numbers. The company anticipates easier comparisons in 2025 as construction disruptions at its Londoner property come to an end.
Wynn, meanwhile, stands out in the global gaming landscape for its relative value, with a stabilizing Chinese economy is expected to support Wynn’s valuation, providing reassurance to long-term investors.
While LVS and Wynn are preferred picks, CBRE considered that the new stimulus measures are expected to unlock both technical and fundamental value across the entire Macau gaming sector.
