Macau gaming stocks look set for a re-rating given a recent spate of dividend declarations and growing bullishness on the sector, according to investment bank Morgan Stanley.
In a recent note in which they outlined their expectation for a 15% year-on-year increase in market-wide gross gaming revenues in the second half of the year, analysts Praveen Choudhary, Anson Lee and Stephen Grambling pointed to the interim dividends declared by Wynn Macau Ltd, MGM China Ltd and Galaxy Entertainment Group – all of which reflected greater than 50% payout ratio. Wynn’s announcement was particularly surprising with the company matching its HK$0.185 per share payout from FY24 despite reporting a year-on-year decline in both revenues and profit.
In its note, Morgan Stanley stated, “[Dividends are] coming back, which usually results in re-rating.”
It added that Wynn has already been upgraded to OverWeight, “reflecting potentially the highest dividend yield among operators with higher interim payout, projected market share gains in 3Q thanks to strong premium mass, and recent underperformance versus peers.”
The analysts also detailed a trip to Macau last week which reinforced their bullishness, noting that they visited Macau on a Monday to find the city full and hotels difficult to book.
As such, they are above consensus at 15% GGR growth in 2H25 including 12% growth in August.
“We think consensus has not factored in operating leverage and re-rating that will follow,” the analysts wrote.
Macau GGR has outperformed for four consecutive months now, including two straight months of 19% year-on-year growth in June and July.
