Morgan Stanley expects Macau's gaming revenue to increase by up to 5% in February, reaching MOP 20.7 billion, with Galaxy Entertainment as the top pick

JP Morgan published a research report indicating that, according to industry data, Macau's total gaming revenue for the first fifteen days of February reached MOP 8.8 billion, meaning the average daily gaming revenue for the month is approximately MOP 587 million. In the past week, the average daily gaming revenue fell to MOP 543 million, compared to MOP 625 million and MOP 730 million in the first week of February and January, respectively.

JP Morgan believes that the slowdown in gaming revenue is related to seasonal factors before the Lunar New Year and the lower win rate in VIP rooms, emphasizing that the gaming revenue performance before the Spring Festival does not reflect true demand, and therefore the bank advises against overinterpretation. Looking ahead to the Lunar New Year period and February performance, the bank predicts that gaming revenue will still fluctuate in the coming weeks, with average daily gaming revenue in the third and fourth weeks possibly ranging from MOP 850 million to MOP 1 billion and MOP 750 million to MOP 800 million, respectively. The current forecast for total gaming revenue in February is expected to grow by 2% to 5% year-on-year, reaching MOP 20.1 billion to MOP 20.7 billion, which translates to an average daily level of MOP 720 million to MOP 740 million, with the total for the first two months expected to grow by 13% to 14% year-on-year.

In terms of stock selection, the bank recommends that investors focus on individual stocks rather than waiting for a revaluation of the overall industry. It lists Galaxy Entertainment (00027.HK) as its top pick, giving it an "Overweight" rating, with the remaining preferences in order being MGM China (02282.HK), Sands China (01928.HK), Wynn Macau (01128.HK), Melco Resorts & Entertainment (MLCO.US), Melco International (00200.HK), and SJM Holdings (00880.HK)