With Macau’s regulator reporting Friday a significant increase in fourth quarter revenues from the VIP baccarat segment, investment bank JP Morgan trimmed its EBITDA forecasts for 2026 as a result of unfavorable mix.
In a note, analysts DS Kim, Selina Li and Lindsey Qian said that while GGR is still expected to grow this year, their confidence in the profit upcycle had dimmed given the larger contribution of VIP – which offers much lower margins than both base mass and premium mass. As such, their 2026 EBITDA forecasts for Macau’s six operators have been trimmed by an average of 3% to 4% and both SJM, from Neutral to UnderWeight, and Melco, from OverWeight to Neutral, downgraded.
Describing its previously “outright bullish” stance as now being “untenable”, the bank explained that while revenue delivered in 2025 – with GGR growth of 9% beat an initial 5% estimate – profits didn’t.
“EBITDA lagged top-line throughout the year, growing 6% in 2025 on JP Morgan estimates, or only +1 to +2% if adjusted for VIP luck – below our initial +4% expectation,” the analysts wrote.
“Why? First, unfavorable mix. VIP mix grew to 16% of total GGR by 4Q25 vs 12% in FY24, and even mass margin likely weakened as the mix shifted toward super-premium and premium play versus high-margin base mass.
“Second, OPEX ran fast at [an estimated +7% in FY25, versus the typical +3% inflation. [This was] partly volume-driven, but spikes in non-gaming (concerts, sports, private events) pushed OPEX higher; a chicken-and-egg setup where events lifted GGR but also weighed on margins given weaker flow-through.
“Lastly, reinvestment/competition was not the core 2025 margin headwind in our view (unlike in 2H23 and 2024), except at Sands, which is deliberately catching up.”
JP Morgan added that, with GGR having reached its growth peak in Q4, growth would now decelerate through 2026. While upside risk persists, “two quarters of weak flow-through have dented our confidence in a profit-upcycle, so we’re tightening our EBITDA until the margin shows signs of recovery,” the analysts said.
