JP Morgan remains confident in Macau casino stocks
Analysts predict decent Q4 growth.
Macau.- JP Morgan Securities (Asia Pacific Ltd) has expressed confidence in the resilience of Macau’s casino stocks despite drops of between 2.5 per cent and 12.7 per cent on Friday. Analysts DS Kim, Mufan Shi, and Selina Li said the drop was an exaggerated since Macau operators as a group largely delivered Q3 results in line with expectations.
The drop in stocks on Friday followed Thursday’s third-quarter results from Wynn Macau and Galaxy Entertainment Group Ltd, in which EBITDA wase below market consensus from a sequential perspective. Melco Resorts & Entertainment Ltd’s quarterly EBITDA, reported on Tuesday, was also below the market’s expectations from a quarter-on-quarter standpoint.
However, Mass gross gaming revenue (GGR) in Q3 rose by 12 per cent quarter-on-quarter, driving a 15 per cent quarter-on-quarter growth in industry EBITDA. Fourth-quarter performance in mass-market casino GGR is expected to grow by 12 per cent sequentially, more than the average quarter-on-quarter uptick during the period 2014 to 2019.
JP Morgan noted that the majority of operating expense increases in the third quarter could be attributed to openings, such as Raffles at Galaxy Macau in July and Andaz in September.
