Credit Suisse upgrades Macau stocks with ‘light at the end of the tunnel’

Credit Suisse analyst Kenneth Fong sees “light at the end of the tunnel” for the Macau gaming sector with risk/reward profiles becoming more favorable. This is due to “less-than-feared” regulations, as discussions with industry participants offer insights that the government’s proposed gaming law may be less stringent than expected, Fong told investors in a research note on Wednesday night. In addition, the analyst believes the expected Hong King quarantine-free border reopening with Macau will “provide meaningful upside” for current gaming revenue forecasts. Pent-up demand from Hong Kong and travelling Chinese is likely to generate 40%-50% incremental revenue for Macau’s current gross gaming revenue, Fong estimates. The analyst upgraded Sands China (SCHYY), SJM Holdings (SJMHY), Wynn Macau (WYNMF), Galaxy Entertainment (GXYEF), Melco Resorts & Entertainment (MLCO), Melco International (MDEVF) and MGM China (MCHVF) to Outperform. He also upgraded Studio City (MSC) to Neutral from Underperform. Fong’s top pick is Sands China.