<Study>UBS Ratings and Price Targets for Casinos (Table)

The analyst rating from Morgan Stanley is based on the expectation of strong growth in Macau's gaming revenue (GGR) and EBITDA for the fourth quarter of 2025. They anticipate a 17% year-over-year increase in GGR and a 15% increase in industry EBITDA, which exceeds street consensus. This positive outlook is expected to lead to upward revisions in earnings forecasts for the market. Morgan Stanley has identified MGM China and Galaxy Entertainment as top picks, predicting that their results will contribute to this upward trend. They expect double-digit growth in GGR for both the fourth quarter of 2025 and the first quarter of 2026, with improvements in casino valuations supported by potential increases in dividends per share (DPS). Galaxy Entertainment is rated as Equal-weight due to its lower dividend yield and higher EV/EBITDA multiple, with a target price adjustment from HKD44 to HKD43. In contrast, Sands China is rated Overweight, reflecting its efforts to gain market share and potential for DPS doubling, with a maintained target price of HKD23.

The analyst rating for SANDS CHINA LTD is based on several optimistic factors identified in JPMorgan's research report. The reasons include: 1. Positive GGR Growth: Macau's Gross Gaming Revenue (GGR) showed a significant increase, with a daily average GGR of approximately MOP742 million in early December, reflecting over 25% growth compared to the same period last year. 2. Sustained Growth Potential: If the current growth trend continues, the GGR for the fourth quarter of 2025 could rise by 18-19% year-over-year and 8-9% quarter-over-quarter, surpassing market expectations. 3. Dividend Increase Anticipation: JPMorgan expects SANDS CHINA LTD to announce an increase in its 2026 dividend by the end of February, which is a positive indicator for investors. 4. Market Share and Profit Share Improvements: The broker anticipates improvements in the company's market share and profit share for the fourth quarter of 2025. These factors led JPMorgan to rate SANDS CHINA LTD as Overweight, with a target price of $24.5. In contrast, the ratings for MELCO INT'L DEV and SJM HOLDINGS were more cautious, reflecting a less favorable outlook for those companies.

The analyst rating from UBS is positive due to several key factors influencing the Macau gaming industry. They expect robust demand driven by a wider range of tourism products, enhanced marketing efforts, and a more diversified customer base. Additionally, UBS has raised its gross gaming revenue (GGR) growth forecasts for 2025 and 2026, indicating confidence in the industry's growth potential. The anticipated EBITDA growth for gaming operators further supports this positive outlook, particularly with a focus on premium segments and the stability of the competitive landscape among gaming stocks.

The analyst rating is influenced by a decline in Macau's average daily Gross Gaming Revenue (GGR), which fell to approximately MOP671 million, below the previous average of MOP711 million. This decline is attributed to the impact of the Macau Grand Prix held from November 13 to 16. Additionally, the average daily GGR month-to-date (MTD) is around MOP694 million, reflecting an 11% month-over-month drop, consistent with historical seasonality from 2015-2019. Despite this decline, the broker maintains a positive outlook on specific stocks, rating GALAXY ENT, MGM CHINA, and WYNN MACAU as "Buy" with target prices set for each.