Macau’s gambling revenue is on a downward trend in early July, wrote Jefferies Equity Research analyst Andrew Lee. Mass-market gambling is down as much as five percent from June, while VIP winnings are three to four percent lower.

Lee’s figures show Macanese casinos averaging win of $68.4 million per day for the first seven days of this month. “This is slightly weaker than expected, given it’s below June’s full month [$73.4 million per day], which was the lowest ADR for 2024,” Lee wrote.

“However, the weak June is somewhat expected, given the normal post-holiday seasonality and the pocket share shift from the Euro 2024 tournament,” Lee continued, alluding to the popular soccer tournament, which is competing for punters’ attention. He elaborated, “Euro 2024 continues to be a reason, with the final next Sunday, but also the recent regulatory focus on money exchanges in Macau may also be a factor.”

The analyst further noted that the Chinese Ministry of Public Securities had announced last Friday a heightened focus on putting illegal money exchanges out of business. Macau has strict limits on the currency that can be brought into the enclave. Amounts of $15,000 or greater must be reported to the authorities before entering Macau.

Lee’s sources indicated that casinos could expect between $68.4 million and $74.6 million per day through the end of July. This, he noted, “either suggests a bottom or a set-up for disappointment.”

Pegging Macanese gambling win to peaks and valleys in tourism, Lee observed that June is traditionally slow for the enclave, as is September. He looked to summer holidays to provide a lift, as July is historically six percent better than June and August two percent better still.

The historical apogees for gambling revenue in Macau are Chinese New Year, which falls in January or February, and Golden Week in October. “All of this suggests the current data points are negative,” Lee added.

Gaming stocks for companies exposed to Macau continued to underperform, Lee reported, close to their low-water valuation marks. Two low-flying stocks were identified as Sands China and Wynn Macau.

Sands was set to absorb a further blow, losing market share through the end of the year, as 4,660 hotel rooms at The Londoner come offline for renovation. Sands’s Sheraton and Conrad hotels will be affected by the move. By contract, Wynn Resorts has no refurbishments planned for its Macanese properties.

SJM Holdings was cited as the one company defying market gravity, valued at 9.8 times cash flow. However, “Questions remain about the profitability of [Grand Lisboa Palace] with its property location less convenient and connected.”

Lee continues to like Galaxy Entertainment for its recapture of market share. He also lauded MGM Resorts International for its performance in Macau and the arrival of easy comparisons at its United States-based casinos.

As for Sands and Wynn, “We believe a catalyst is required for re-rating LVS and WYNN and the current update is not supportive,” Lee opined. “In short, we believe the moderating revenue could limit the upside potential to U.S.-facing stocks exposed to the market.”

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