HSBC Research raises Macau's gaming revenue growth forecast for this year and upgrades Sands China to a "Buy" rating

HSBC Global Research published a report indicating a more positive outlook on the Macau gaming industry, as demand for travel from mainland China and the number of inbound tourists to Macau remain strong. The bank raised its forecast for Macau's total gaming revenue growth in 2026 from 4% to 8%, reaching MOP 264.47 billion, and expects to continue recording double-digit growth in the first quarter of 2026, benefiting from a low base effect.

As satellite casinos exit the market by the end of 2025, the bank anticipates a shift in market share. However, considering that Sands China (01928.HK) has increased its capital expenditure to near industry levels by 2025, along with some operators focusing more on profitability, the bank expects the competitive landscape to stabilize with limited new supply in 2026.

The bank upgraded Sands China’s rating from "Hold" to "Buy," raising the target price from HKD 18.8 to HKD 24, anticipating a 33% profit growth in 2026, with efforts to gain market share showing results.

At the same time, the bank maintains its preference for Galaxy Entertainment (00027.HK) and MGM China (02282.HK), raising Galaxy's target price from HKD 43.5 to HKD 47, continuing to assign a "Buy" rating. The bank lowered MGM China's target price from HKD 17.3 to HKD 17, maintaining a "Buy" rating, with EBITDA forecasts for 2026 to 2027 adjusted down by 7% to 9% due to increased royalty fees