JPMorgan: Forecasts Macau gaming gross revenue in February to increase by up to 5% year-on-year, with Galaxy Entertainment (00027) as the top pick

CITIC Securities APP learned that JPMorgan released a research report stating that, according to industry data, Macau’s total gaming revenue in the first fifteen days of February reached 8.8 billion MOP. In other words, the average daily gaming revenue for the month was approximately 587 million MOP, with the past week’s average dropping to 543 million MOP. Compared to 625 million MOP in the first week of February and 730 million MOP in January.

JPMorgan believes that the slowdown in gaming revenue is related to seasonal factors before the Lunar New Year and lower win rates in VIP rooms. They emphasize that the gaming revenue performance before the Lunar New Year does not reflect true demand, so the bank advises against overinterpreting it. Looking ahead to the Lunar New Year period and February performance, the bank forecasts that gaming revenue will continue to fluctuate in the coming weeks. The third and fourth Sundays may see gaming revenues ranging from 850 million to 1 billion MOP and 750 million to 800 million MOP, respectively. Currently, the forecast for total gaming revenue in February is a year-on-year increase of 2% to 5%, reaching 20.1 billion to 20.7 billion MOP, with an average daily level of 720 million to 740 million MOP. The combined total for the first two months is expected to grow by 13% to 14% year-on-year.

Regarding stock selection, the bank recommends investors focus on individual stocks rather than waiting for a sector-wide valuation re-rating. It lists Galaxy Entertainment (00027) as the top pick, with an “Overweight” rating. Other preferred stocks include Melco Resorts China (02282), Sands China (01928), Wynn Macau (01128), Melco International (MLCO.US), Melco International Development (00200), and SJM Holdings (00880).