CLSA Favors GALAXY ENT and SANDS CHINA LTD as Top Picks in Macau Gaming Sector

Stock News
04/13

A research report from CLSA projects that Macau's gaming industry will achieve a 7% year-on-year increase in EBITDA for the first quarter of this year, reaching $2.067 billion. This growth is supported by a 14% rise in gaming revenue. Although the expansion is primarily driven by the high-end market, the brokerage does not anticipate an expansion in industry profit margins. This is mainly because, amid persistently intense competition, the win rate in VIP rooms is unlikely to exceed normalized levels. CLSA has updated its profit forecasts for various gaming operators to reflect the latest assumptions regarding rebates, operating expenses, and non-gaming revenue. Consequently, it has correspondingly lowered target prices. GALAXY ENT and SANDS CHINA LTD remain the top selections in the sector. CLSA views GALAXY ENT favorably due to its robust balance sheet, market share, and profitability. SANDS CHINA LTD offers the best visibility regarding dividend growth. The brokerage has downgraded WYNN MACAU from "Outperform" to "Hold," citing limited potential for further earnings upside.

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