Jefferies Equity Research analyst David Katz called Macau casino revenues for June “modestly positive” for gaming stocks. “The June results are seasonally weaker and therefore less consequential than other months, and reflect the lowest YoY growth of 2024,” he explained.
Macanese gambling revenues were 12.4 percent lower in June than in May, but 16.4 percent greater than in June of last year. This exceeded the upper end of Katz’s twice-reduced revenue guidance, topping out at $2.2 billion for the month.
In terms of daily casino win, June was the slowest month of the year to date, “but the slowing trend in June was somewhat expected given the normal post-holiday seasonality and the Euro 2024 [soccer] tournament.” Katz deemed July and August “less consequential” for the Chinese enclave, looking ahead to the Golden Week holiday in October.
“Macau sector valuations are implying a high level of risk in the recovery, which is not evident in current estimates, as most Macau-related names under coverage continue to trade below mid-cycle,” Katz wrote. The exceptions were Galaxy Entertainment, which is trading at 10.7 times cash flow, and SJM Holdings, trading at 10 times cash flow.
Before leaving the subject of SJM, Katz said that questions remain surrounding the profitability of Grand Lisboa Palace, particularly in light of the focus of all other operators on growing market share. Sands China, Wynn Resorts, and MGM Resorts International, he noted, were trading near the bottom of their historical range.
Katz picked Galaxy, which trades on the Hong Kong Stock Exchange, as a standout stock. He also cited MGM, partly for a favorable-looking 2024 in Las Vegas and for its execution in Macau.
