Despite the slow Chinese New Year period, Seaport Research Partners maintains its prediction for Macau 2025 gross gaming revenue (GGR) growth at ‘nearly 7 percent […] with upside surprise possible on a turnaround in the Chinese economy and consumer sentiment’.
According to a Thursday note, Senior Analyst Vitaly Umansky mentioned the increased tariff regime in the US, which could cause ‘China policymakers to more forcefully look at expanding consumption and improving domestic consumer confidence’. This will largely hinge on fiscal stimulus and regulatory easing measures, with a central focus of ‘shoring up the real estate market’.
If the measures are effective, this ‘could lead to stronger base mass recovery (with continued premium growth) in the latter part of 2025’.
Umansky notes that gaming stock valuations ‘remain largely depressed, setting up a continued strong risk/reward positioning’.
Regarding estimates for February, the senior analyst indicates ‘slightly better’ expected results compared to January, depending on how strong the rest of the month is post-CNY. The estimate is based on average daily GGR of MOP609 million (3 percent above January’s ADR) ‘which should be achievable’.
February GGR is estimated to reach MOP18.5 billion ($2.3 billion), up by 0.1 percent yearly and 1.3 percent month-to-month. ‘If our estimate winds up being correct, the combined Jan/Feb period would be -2.8 percent year-on-year’.
Top picks for the analyst are Las Vegas Sands, Sands China and Galaxy, ‘as the companies should have catalysts in 2025 with share gains in Macau (and continued Singapore strength for LVS)’.
Meanwhile, Melco Resorts and MGM ‘have the highest potential upside if valuations normalize, despite negative investor sentiment for both stocks. Seaport maintains a ‘sell’ suggestion for SJM due to ‘difficult balance sheet issues in the coming two years and lack of ability to material take market share in Macau’.
