Gaming stocks fell across the board, with Melco International Development Ltd (HK: 00200) down 4.74% at HK$2.41, Sands China Ltd (HK: 01928) down 4.49% at HK$10.86, Galaxy Entertainment Group Ltd (HK: 00027) down 4.24% at HK$31.6, and SJM Holdings Ltd (HK: 00880) down 3.72% at HK$1.165.
Citi estimates that Macau's gaming revenue for the first 19 days of October was about MOP14.1 billion, with average daily gaming revenue from October 12 to 19 at about MOP613 million, 16% lower than the roughly MOP729 million daily average in the week of October 5. The bank maintained its October gaming revenue forecast of MOP23 billion, implying a 5% year-on-year decline.
JPMorgan said that cheap valuations alone are not enough. Market consensus figures may still be further revised down in line with its estimates. Earnings downgrades should not come as a surprise, as most people already expected cuts, but based on recent trends, the magnitude of the reductions appears significantly larger than most expected. Combined with likely downbeat management commentary on the third quarter, this could further weigh on sentiment. With no clear re-rating catalyst in sight, the bank maintained a cautious and selective stance on the sector.
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