<Research>CLSA: November GGR Exceeds Expectations; December GGR Projected to Increase by 15% Year-over-Year

The analyst rating from Citi is based on the expectation of a 13% year-over-year increase in industry EBITDA for casino stocks, driven by a 15% year-over-year increase in quarterly gross gaming revenue (GGR). This positive outlook suggests that the overall health of the casino industry is improving, leading to increased profitability, as indicated by a projected increase in the EBITDA margin to 27.5%. Specifically, the report highlights that GALAXY ENT and MGM CHINA are likely to report the largest quarter-over-quarter market share improvements, which supports a "Buy" rating for these stocks. Conversely, SJM HOLDINGS is expected to experience the largest market share loss due to the closure of satellite casinos, resulting in a "Sell" rating for that stock. The ratings reflect the analysts' confidence in the growth potential of certain companies within the casino sector while cautioning against others facing challenges.

The analyst rating for GALAXY ENT (00027.HK) is a Buy, primarily due to the company's expected EBITDA growth of 31% YoY in 4Q25, which is significantly higher than the projected 14% growth for the overall Macau gaming industry. This anticipated growth is attributed to several concerts being held at Galaxy Macau and favorable VIP hold rates. The potential for above-average EBITDA growth is expected to drive a short-term increase in the stock price, leading Citi to set a target price of HKD54 for the company.

The analyst rating from CLSA is based on the expectation of a 15% growth in gross gaming revenue (GGR) for Macau's gaming industry, which is anticipated to lead to a 16% year-over-year increase in industry EBITDA for the fourth quarter of 2025, reaching USD2.2 billion. CLSA has revised its earnings forecasts by incorporating actual GGR data and adjusting market share and profit margin forecasts. As a result, they have lowered the target price for WYNN MACAU while raising it for GALAXY ENT, which remains rated as "Outperform." GALAXY ENT and MGM CHINA are highlighted as CLSA's top picks in the industry, with a focus on EBITDA profit margins and dividends being key considerations for investors ahead of the results release.