Some rebound post WC seen, but weaker macros also bite; lower Sands to Neutral

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Gaming - Macau

Some rebound post WC seen, but weaker

macros also bite; lower Sands to Neutral

Rating Change

Worst behind us, but stay selective; Sands to Neutral

03 August 2026

The modest rebound in Macau GGR in 2H July following World Cup suggests the worst of

the recent slowdown may be over, but there is also likely underlying softening –

consistent with weaker macro trends in China. Other concerns include competitive

pressures, potential US rate hikes and impact from China’s new offshore investment

rules/ taxation of offshore trusts. Yet, operators still generate robust cash flow and offer

attractive dividend yields, while RMB strength is also a positive. We remain selective and

downgrade Sands China to Neutral following its recent share price rally (new PO:

HK$15.5). We cut our sector POs by an average of 11% to reflect lower estimates and

target multiples. Galaxy remains our top pick given its strong execution and balance

sheet, while investors are likely to stay focused on the implications for Buy-rated MGM

China after parent MGM Resorts receives a takeover proposal. We maintain U/P on SJM.

Equity

Macau/China

Gaming

July GGR fell 8% YoY, but some rebound in 2H post WC

July GGR declined 8.4% YoY, though ADR accelerated from MOP608mn in 1H to

MOP682mn in 2H despite adverse weather conditions. Assuming some further release

of pent-up demand, we expect GGR to edge up in Aug despite difficult comps, before

remaining broadly flat for the rest of the year. We now forecast FY26 GGR growth of

2.7% (vs. 5.3% previously) and FY27 growth of 4% YoY (against World Cup comps vs.

+5% previously). Our FY27E GGR forecast of MOP260bn is 4% below our prior estimate.

Cut POs by 11% on lower earnings estimates

We cut sector EBITDA/cash earnings (core profit + D&A) by 3.5%/4.8% in FY26 and

3.6%/5.0% in FY27 to reflect lower GGR assumptions. We also update our valuation

framework by focusing on the post-reopening period (2023 onward, v. 2015 previously)

and shifting from FY26E to a blended FY26/FY27E valuation basis. On our revised

estimates, the sector trades at 9x FY26E and 8.6x FY27E EV/EBITDA, below historical

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