Banking group Morgan Stanley saw casino floors on a Monday during a recent field trip “busier than usual amid seasonality”.
The institution said it “saw strong footfall and robust casino business” as the summer period “remains busy” for the city’s casino operators.
“Minimum bets on Galaxy [Macau’s] gaming floor were HKD1,000 [US$128] and for Melco they were between HKD1,000 and HKD2,000. It is difficult to get hotel bookings in Macau, suggesting strong demand during summer holidays,” wrote analysts Praveen Choudhary, Anson Lee, and Stephen Grambling in a recent note.
“The non-gaming programming, including concerts and sports events, is filling up in the second half, suggesting upside to our estimates,” stated the analysts.
“Our second-half 2025 GGR [gross gaming revenue] growth forecast of 15 percent year-on-year” is “above consensus,” but against the backdrop of August’s estimated 12 percent annual GGR growth, they added.
The Morgan Stanley team also observed: “We think consensus has not factored in operating leverage and re-rating that will follow.”
The institution noted, referring latterly to August 18: “Our Macau trip reinforces our bullishness on Macau: it’s full on [a] Monday morning and hotels are difficult to book.
“We see second-half 2025 GGR growth of 15 percent year-on-year to be super strong, compared to China’s consumer outlook.”
The bank also noted that among the Macau names, “dividend is coming back, which usually results in re-rating” of the stocks.
Morgan Stanley said that Wynn Macau Ltd, with the “highest” dividend yield – it announced an interim dividend of HKD0.185 on August 20 -, and MGM China Holdings Ltd and Galaxy Entertainment Group Ltd, “with more than 50 percent” dividend payout ratio, “stand out” in the Macau market.
MGM China announced on August 7 its interim dividend would be HKD0.313. Galaxy Entertainment flagged its HKD0.7 interim dividend on August 12 at the time of its first-half results.
Morgan Stanley said that Sands China Ltd’s interim dividend of HKD0.25 announced on August 15, was “less than expected, even though [a] 60 percent payout ratio”. The bank said the figure “may have been related to payment of [a] US$1-billion shareholder loan” to its parent, United States-based Las Vegas Sands Corp.
Morgan Stanley observed that Macau market competition “remains fierce; thus, margin lift is not visible yet”.
Industry operating expenditure in the second quarter had been “up 14 percent year-on-year, which is quite high”.
Though Morgan Stanley suggested that as the second-half results are likely to show “very high projected GGR growth of 15 percent,” it expects “operating leverage to come back and competition to subside”.
The institution added that while Macau market share was “difficult to predict… over a long period, with too many moving parts,” Galaxy Entertainment, with Phase 4 of its Cotai resort Galaxy Macau, “should benefit”.
The bank said: “In the near term, none of the operators are adding any significant capacity; thus, market share trends could remain similar to the second quarter’s. However, we expect Wynn and Galaxy to gain share in the third quarter.”
Morgan Stanley suggested that the discontinuation by year-end of the satellite casino licensing business model – most of the venues under SJM Holdings’ permit – “is negative for SJM”.
The bank added that even though the SJM group “receives more tables” for its core operations, “it also loses some revenue, which could leak to Sands and MGM”.
