Macau Gaming "Q226 preview: a soft season with football tournament impact" Chan

Research evidence excerpt

Macau Gaming "Q226 preview: a soft season with football tournament impact" Chan

Macau Gaming UBS Research

UBS Research THESIS MAP MOSTSector ThesisFAVOREDMap LEAST FAVORED

Melco Resorts SJM

Pivotal Questions Q: Will the new policy on mainland outbound investment impact gaming demand?

We believe the fundamental impact should remain manageable. Gaming revenue mix has shifted to

mass, which is less cross border flow sensitive vs VIP, since the new concession period. Operators also

indicated that there's been no apparent impact on gaming demand so far.

Q: Will EBITDA margin pressure moderate in 2026E?

Likely. We expect industry EBITDA margin to be supported by gaming revenue growth and a stabilised

competitive environment in 2026.

Q: Will dividend payout increase in 2026E?

Likely. Operators are placing increased emphasis on shareholder return. As capex moderates and

leverage declines, this should drive the resumption of dividends for Melco, and higher DPS from

Sands in 2026E. We believe sector dividend yield of c4.9% could potentially provide support to share

price.

WHAT´S PRICED IN? The sector share price has dropped by an average 26% YTD due to concerns over growth and

margins, potential impact from the outbound investment policy, and the one-off impact from world

cup in June-July. We believe these headwinds appear reflected in the price, with the sector trading at

c8.3x 2026E EV/EBITDA, c0.7D below historical average since 2023. We see positive risk-reward at

current valuation level, with dividend yield of c4.9% providing downside support to share price.

Potential positive catalysts include increased shareholder return and further evidence of demand

resilience.

UBS VIEW We expect sentiment overhang to continue to weigh on the sector in the next 1-2 months. While the