Macau Casino Stocks Have More Upside Potential, Says Analyst
Macau Casino Stocks Have More Upside Potential, Says Analyst
Table of Contents
- Industry leaders prefer Sands and Wynn among US-based Macau operators
- Gross gaming revenue (GGR) data suggests further upside
- Recent weeks have shown significant GGR increases for Macau casinos
Macau casino stocks are experiencing a significant resurgence, buoyed by impressive gross gaming revenue (GGR) data that signals potential for even greater growth. This positive trend has been highlighted by Jefferies analyst, Anne Ling, who notes that channel checks indicate a whopping 25% year-over-year increase in GGR for the week ending August 24, along with a 9% jump from the previous week.
This surge represents the best performance in non-Golden Week periods since before the COVID-19 pandemic. Ling asserts that August’s GGR growth is expected to be a respectable low- to mid-teens percentage growth.
This recent strength underscores a continuing wave of bullishness for Macau concessionaires. In July, GGR hit $2.74 billion, marking a 19% increase compared to the previous year and the highest monthly total since before the pandemic.
Analysts predict that concessionaires will reveal earnings before interest, taxes, depreciation, and amortization (EBITDA) numbers, reinforcing the view that Macau casino stocks are undervalued compared to potential EBITDA growth.
Preferred Casino Stocks: Sands and Wynn
Ling highlights top picks among Macau casino stocks, identifying Galaxy Entertainment, Las Vegas Sands (NYSE: LVS), and Wynn Resorts (NASDAQ: WYNN) as leading options for investors.
“In a strong growth market, Galaxy is positioned to leverage its scale and develop its Cotai assets, while LVS is expected to gain traction as its strategic approach evolves.”
Wynn, according to Ling, is benefiting from a strong presence in the premium segment and is poised for growth with upcoming capital projects. This robust market positioning allows for capital leverage as the gaming market expands.
Moreover, there’s a notable shift in Macau’s gaming scene, with premium-mass players leading market recoveries, which substantially benefits Galaxy and Wynn. Sands’ Londoner Macau resort enhances its appeal to this demographic. Ling advises that valuations on Hong Kong-listed Macau casino stocks remain attractive, which may entice investors contemplating shares of Galaxy and Sands China.
“Most HK-listed stocks trade below 10X 2026 EBITDA, leading us to favour Galaxy and Sands China, given the ongoing upward revisions in estimates,” Ling writes.
Wynn’s Potential for Continued Growth
Among Macau casino stocks, Wynn may be overvalued due to a substantial gain of 36.66% year-to-date, which suggests minimal margin for error. However, analysts are optimistic about Wynn’s prospects as market interest in Macau gaming returns and as Wynn’s opportunities in the United Arab Emirates begin to come into play.
“While WYNN may appear fully valued from a US perspective at 11.2X 2026E EBITDA, we believe there’s potential for further growth based on increased Macau estimates and new projects in the UAE, which are not yet reflected in current valuations,” concludes Anne Ling.
In summary, the Macau gaming market is poised for a notable rebound, as demonstrated by the recent increases in GGR. With industry players like Sands and Wynn leading the charge, investors might find lucrative opportunities as the market revitalizes. Keeping an eye on developments within the sector will be essential for making informed investment decisions.
