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JP Morgan “not worried” by correction in Macau casino stock prices

November 13, 2023 Macau Casino & Hotel Industry Updates

According to JP Morgan Securities, as of Friday’s close, the value of casino stocks in Macau had decreased by 2.5% to $12.7%. The organization said they are not worried regarding the recent decline estimating that the decrease was “significantly exaggerated,” despite the fact that over forty investors contacted it, as stated in the statement.

As Macau operators’ third-quarter earnings were in accordance with consensus estimates, JP Morgan analysts assert that the correction is puzzling. Mass gross gaming revenue (GGR) increased by 12% quarterly, and industry EBITDA increased by 15% in the third quarter, according to their assessment. These figures indicate that positive business trends continue to prevail.

The sequential growth rate of 12 percent in the fourth quarter of mass-market casinos’ GGR, according to analysts, is significantly higher than the historical seasonality average of 5 percent from 2014 to 2019. This may mitigate the cyclical headwinds induced by China’s macroeconomic conditions and consumer behavior, indicating that the recovery is still proceeding.

JP Morgan advises investors to capitalize on the recent decline in Macau’s earnings visibility, as it is comparatively higher than that of several other consumer industries. The overreaction was deemed unnecessary, in their opinion, due to the emphasis placed on the favorable business trends observed in the Macau casino industry.