HSBC Research reiterated its bullish stance on Macau’s gaming sector, maintaining Buy ratings on three major casino operators as May’s gross gaming revenue is forecast to climb by up to 10 percent year-over-year.
In a report, HSBC analysts said they remain positive on Sands China Ltd. (1928.HK), Galaxy Entertainment Group Ltd. (0027.HK), and MGM China Holdings Ltd. (2282.HK), keeping price targets unchanged at HKD22.6, HKD48.5, and HKD17, respectively.
The bank’s optimism is supported by solid gaming figures, with Macau’s gross gaming revenue (GGR) for the first 10 days of May reaching approximately MOP7.8 billion. This translates to an average daily revenue of MOP780 million, which while flat year-over-year, represents an 18 percent increase from the prior month, driven by a 17 to 20 percent month-over-month jump in mass market GGR.
HSBC projects full-month May GGR between MOP21.7 billion and MOP23.3 billion, suggesting a continued recovery even with a high base last year. The endorsement comes as operators like Sands China and Galaxy Entertainment emphasize long-term non-gaming investments to secure growth, a strategy supported by a 4 percent rise in per capita non-gaming spending from mainland visitors in the first quarter.
The bank's report noted that the strong monthly performance in May was achieved despite VIP hold rates tracking below normal levels, indicating the underlying strength of the mass and premium-mass segments. VIP rolling chip volume still increased by 18 to 22 percent month-over-month.
The positive analyst commentary aligns with recent executive sentiment. At the G2E Asia conference, Sands China CEO Grant Chum described himself as an "unrelenting optimist" on Macau's future, citing political stability and an "unmatched supply of resort product" as key advantages. He argued that the cost to replicate the city's integrated resort infrastructure today would be nearly five times the original investment.
Macau's six casino concessionaires are all actively contributing to the city's diversification strategy. Galaxy Entertainment, which reported a 10.7 percent year-over-year increase in first-quarter net revenue to HKD12.4 billion, is focusing on its Phase 4 expansion, which is slated for a 2027 completion.
HSBC's report also highlighted that non-gaming spending from mainland Chinese visitors turned positive in the first quarter, rising 4 percent year-over-year. This was driven primarily by shopping consumption in jewellery, watches, and cosmetics.
The continued bullish calls from major banks like HSBC suggest institutional confidence in Macau's sustained recovery and diversification strategy. Investors will be watching the full-month GGR data release in early June to see if the strong momentum from the mass market can offset potential VIP softness and confirm the growth trajectory.
This article is for informational purposes only and does not constitute investment advice.
