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<Research>JPM Expects MO Casinos' 4Q Earnings Growth to Lag Behind GGR, Downgrades SJM HOLDINGS/ Melco Resorts & Entertainment
Recommend 12 Positive 21 Negative 15 |
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JPMorgan said that it turned optimistic about Macau's gaming industry in June 2025, as it judged the industry to be in an 'upcycle,' driven by high-end demand from the wealth effect, ample market liquidity and a K-shaped economic divergence. In the subsequent quarters, GGR exceeded the market's most optimistic expectations. However, profit margins have not improved in tandem, with earnings growth lagging behind the increase in GGR over the past two quarters. The broker expected a similar situation in 4Q25, mainly due to higher operating expenses and a faster VIP skew. Therefore, JPMorgan downgraded SJM HOLDINGS (00880.HK) from Neutral to Underweight, and Melco Resorts & Entertainment (MLCO.US) from Overweight to Neutral, adopting a selective strategy focusing on market consensus risks and individual valuations. GALAXY ENT (00027.HK) remains the broker's top pick. JPMorgan also removed SANDS CHINA LTD (01928.HK) from its top pick list, and advised investors to avoid SJM HOLDINGS and MELCO INT'L DEV (00200.HK). AASTOCKS Financial News Website: www.aastocks.com |
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