Morgan Stanley: Macau's gaming revenue in December last year fell short of expectations, preferring Galaxy Entertainment and Sands China

Morgan Stanley published a report indicating that Macau's gaming revenue in December last year was MOP 20.9 billion, approximately USD 2.61 billion, representing a year-on-year growth of 14.8% and a quarter-on-quarter decline of 1%, falling short of market expectations. In the fourth quarter of last year, Macau's gaming revenue reached MOP 66.1 billion, approximately USD 8.26 billion, with a year-on-year growth of 15% and a quarter-on-quarter growth of 5.6%. The fourth quarter EBITDA is expected to grow by more than 10% year-on-year.

The report states that the total gaming revenue for Macau in 2025 is projected to be MOP 247 billion, approximately USD 31 billion, reflecting a year-on-year growth of 9%, reaching 85% of the 2019 level. Among this, the mass market revenue has already exceeded 120% of the 2019 level.

Morgan Stanley noted that the enterprise value to EBITDA ratio for the Macau gaming sector is 8.5 times, compared to the average of 12.8 times over the past 15 years, still presenting an attractive opportunity. The firm prefers Galaxy Entertainment (00027.HK) and Sands China (01928.HK). It has downgraded MGM China (02282.HK) to "in line with the market," while maintaining "reduce" for SJM Holdings (00880.HK). Among them, MGM China significantly underperformed in December, which may present a short-term rebound opportunity