Morgan Stanley has released a research report indicating that while optimism persists regarding the tail-end effects of the Spring Festival on Macau casinos, the Lunar New Year performance was moderate. The firm expressed concerns over profit pressures resulting from promotional activities across casino operators. On a positive note, Macau's gaming revenue has outperformed other Chinese consumer stocks and carries no artificial intelligence-related risks. Additionally, sustained growth in cash flow and dividends makes valuations of Macau gaming stocks attractive.

Morgan Stanley noted that although casino operators have emphasized stabilization in promotional spending, similar statements have been made before, and the firm lacks confidence that industry margins have bottomed out. While performance was weak in the early part of the Spring Festival holiday, it improved later on. The report forecasts low single-digit year-on-year growth in gross gaming revenue for the current month, but expects a 13% year-on-year increase for the first two months of the year.

However, Morgan Stanley pointed out that despite strong growth in visitor numbers to Macau, per capita spending has declined, and hotel room supply faces bottlenecks. The average age of gamblers has also been decreasing over time. The firm expressed a preference for Galaxy Entertainment (00027) as an industry representative and Sands China Ltd (01928) for its high dividend yield. Wynn Macau (01128) and Melco Resorts & Entertainment (MLCO.US) were noted as undervalued, while SJM Holdings (00880) may experience significant fluctuations in EBITDA by 2026.