UBS: Macau's average daily gaming revenue during the Spring Festival holiday fell short of expectations, with Melco Resorts, WYNN MACAU, and MGM CHINA as top picks
According to a research report by UBS, based on its channel survey, the average daily gaming revenue in Macau during the Spring Festival holiday (February 16 to 22) was approximately MOP 786 million, lower than the market forecast of about MOP 900 million to 950 million per day. Although initial demand was weak, the transaction volume accelerated in the last three days (February 20 to 22), reaching MOP 1.2 billion to 1.3 billion per day, an increase of about 10% to 15% year-on-year, bringing the average daily gaming revenue for this month to about MOP 650 million, but still down about 8% year-on-year and about 11% month-on-month.
UBS indicated that among various market segments, the average daily transaction volume for mass gaming revenue decreased by 10% to 12% month-on-month, while VIP room transaction volume fell by 8% to 10% month-on-month; the VIP room win rate was between 2.6% and 2.9%; and the demand after the Spring Festival holiday (i.e., this week) will determine the overall performance for the month; however, to achieve the market forecast (i.e., monthly gaming revenue of about MOP 740 million, a year-on-year increase of about 5%), it is challenging to reach daily gaming revenue of MOP 1.1 billion in the remaining 6 days.
UBS's top picks are Melco Resorts & Entertainment (MLCO.US), Wynn Macau (01128.HK), and MGM China (02282.HK) as industry favorites. Below are UBS's ratings and target prices for gaming stocks:
Stock | Investment Rating | Target Price
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Melco Resorts & Entertainment (MLCO.US) | Buy | $9.5
Wynn Macau (01128.HK) | Buy | MOP 8.9
MGM China (02282.HK) | Buy | MOP 18.5
Galaxy Entertainment (00027.HK) | Buy | MOP 46.9
Sands China (01928.HK) | Neutral | MOP 22.4
Melco International Development (00200.HK) | Neutral | MOP 5.5
Amax Holdings (00880.HK) | Sell | MOP 2.5
