[ET Net News Agency, 2 December 2019] HSBC Global Research said Macau gaming industry's
3Q gross gaming revenue (GGR) fell 4% QoQ and 5% YoY, impacted by the VIP segment, which
was down 15% QoQ and 25% YoY.
The research house believes operating conditions could remain challenging near-term with
President Xi's visit planned for end-2019, but HSBC thinks the room for worsening is
limited.
It thinks travel restrictions could dampen November-December GGR but should not impact
fundamentals into 2020. At 11.5x FY2020 EV/EBITDA versus the historical average of 13x for
the past five years, valuation remains undemanding.
HSBC changed its FY2019 GGR growth to -3% from 0% on lower VIP estimates; its FY2019-21
EBITDA estimates rose a little after factoring in new GGR and market share assumptions.
HSBC also lifted its target prices for the casino operators as follows:
Name Target Price Rating
-------------------------------------------------
Galaxy Ent (00027) HK$65.00 to HK$71.00 Buy
MGM China (02282) HK$17.50 to HK$18.30 Buy
Sands China (01928) HK$44.50 to HK$ 49.50 Buy
SJM Holdings (00880) HK$9.50 (unchanged) Hold
Wynn Macau (01128) HK$25.50 to HK$26.00 Buy
Melco Int'l (00200) HK$19.50 to HK$29.00 Buy
(KL)