Macau casino gross gaming revenue (GGR) had since June “topped even the most bullish expectations every quarter,” but operator “margins … haven’t,” says a Friday note from banking group JP Morgan.
“We still think GGR recovery has legs this year, but our confidence in the profit upcycle has dimmed,” stated analysts DS Kim, Selina Li, and Lindsey Qian.
The institution has trimmed to MOP71.9 billion (US$8.95 billion) its forecast for full-year 2026 industry adjusted earnings before interest, taxation, depreciation, and amortisation (EBITDA) for the city’s six operators.
This was “an average of approximately 3 percent to 4 percent below Street, or average minus 6 percent excluding Galaxy [Entertainment Group Ltd]”, said JP Morgan, referring to its estimate relative to investment-community consensus.
JP Morgan’s new 2026 adjusted-EBITDA estimate would nonetheless still be a 5.0-percent improvement on its forecast MOP68.5 billion for 2025, where the operators have yet to report their numbers.
The bank said profit growth for Macau casino firms trailed GGR in the second and third quarters of 2025, with the “fourth-quarter 2025 likely similar on higher operating expenses and an accelerated VIP skew”.
Several brokerages have recently mentioned cost pressures on Macau operators.
JP Morgan suggested that VIP play grew to 16 percent of total GGR by the fourth quarter, versus 12 percent in full-year 2024, and “mass margin likely weakened as the mix shifted toward super-premium and premium play, versus high-margin base mass”.
The analysts also suggested operating expenses “ran fast at plus 7 percent” in full-year 2025, versus “the typical circa 3 percent inflation”.
Non-gaming cost impacts
Factors had included “spikes in non-gaming” such as “concerts, sports, private events” that had “pushed operating expenses higher,” leading to a “chicken-and-egg setup where events lifted GGR but also weighed on margins given weaker flow-through”.
Macau industry EBITDA lagged top-line performance throughout 2025, said JP Morgan, with EBITDA “growing 6 percent … or only plus 1 percent to 2 percent if adjusted for VIP luck,” which was below the institution’s initial 4-percent growth expectation.
“Industry EBITDA margin” for full-year 2025 “slipped to 23.3 percent on a gross basis by JP Morgan’s estimate, versus 23.7 percent a year earlier, which the analysts described as “disappointing,” and with “no operating leverage”.
For luck-adjusted property EBITDA for the fourth quarter of 2025, the JP Morgan team said in a Sunday memo that it expected MGM China to report “the best momentum”, tracking quarter-on-quarter growth of 10 percent; followed by Galaxy Entertainment with an estimated sequential 8-percent growth; and Sands China with 3-percent expansion.
SJM Holdings’ fourth-quarter luck-adjusted property EBITDA was “the clear laggard,” down an estimated 18 percent sequentially, said JP Morgan. The company had been “dragged down” by its “operating expenses burden from the satellite shutdown,” said the institution.
It added: “Melco also had poor momentum (-8 percent quarter-on-quarter), on market share loss and one-off operating expenses” from a 10-year anniversary event for Studio City.
Wynn Macau Ltd’s fourth-quarter luck-adjusted property EBITDA was likely to have been “stable quarter-on-quarter”, the JP Morgan team noted in its Sunday memo.
The institution also observed: “With GGR strength not flowing through to EBITDA, we’d pivot focus to ‘profit shares’ not just market shares.
“Based on a luck-adjusted EBITDA, we estimate Galaxy was the biggest [market] share gainer in fourth quarter [2025] with 130 basis points gain quarter-on-quarter to 24 percent – its highest level in seven years – , followed by MGM (110 basis points quarter-on-quarter gain to 15 percent).
Melco Entertainment and SJM Holdings had “lost the most” in terms of market share of profit share, “by 110 basis points and 90 basis points, respectively, to 13.5 percent and 4.0 percent,” suggested JP Morgan.
(Updated 3.22 pm, Jan 19)
