Lyon: Lowering Macau's gambling revenue forecast by 3% to 4% for the next two years, the outlook is more prudent, and Galaxy Entertainment is preferred by the industry (00027)

The Zhitong Finance App learned that Lyon released a research report saying that due to insufficient supporting macroeconomic indicators, it is becoming more cautious about Macau's gambling revenue prospects and lowered Macau's gambling revenue forecasts by 4% and 3% for 2027 and 2028, respectively, to 259.2 billion and MOP 270.4 billion, respectively, which is equivalent to a 2% and 4% year-on-year increase. The bank mentioned that due to the increase in operating expenses or faster than the growth rate of gambling revenue, EBITDA profit margins may be under pressure, and Galaxy Entertainment (00027) is the only preferred stock in the industry.

The bank maintained its 2026 gambling revenue forecast, but slightly raised its September forecast from a 0.3% year-on-year increase to 1.7%, but lowered its fourth-quarter forecast. The bank also believes that the next stage of growth catalyst will not appear in the short term, and the pressure on profit margins may continue in 2027.

The bank maintained the ratings of each share and adjusted target prices mainly due to lower profit forecasts. Among them, Galaxy Entertainment's target price dropped from HK$41.5 to HK$39.7, Sands China (01928) from HK$17.2 to HK$16.2, MGM China (02282) from HK$14.1 to HK$13.8 and MLCO.US (MLCO.US) from US$6 to US$5.3. The bank rated the above five stocks as “outperforming the market”, while the target price for Wynn Macau (01128) was raised from HK$5.5 to HK$7.1, rating “outperforming the market”. Furthermore, the bank maintained a target price of HK$1.4 for Aobo Holdings (00880), with a rating of “outperforming the market”.