JP Morgan: Macau gambling revenue is expected to increase by 5 to 6% by 2026, with profits expected to surpass revenue growth.

J.P. Morgan released a research report stating that the total revenue of Macau's gaming industry is expected to increase by 15% year-on-year to 20.9 billion Macau patacas in December 2025, reaching 91% of the pre-epidemic level. This figure is slightly lower than the market's expectation of 18%, mainly due to the market gradually raising its expectations in the past. The initial expectation was 15%. For the fourth quarter of 2025, the gaming industry's total revenue is expected to increase by 15% year-on-year, with a quarterly increase of 6%, to 66.1 billion yuan, reaching a six-year high, far exceeding the bank and market's expectation of a 9% year-on-year increase. For the full year of 2025, total gaming revenue is expected to increase by 9% year-on-year to 247.4 billion yuan, higher than the bank's expectation of 5%. Looking ahead to 2026, the bank maintains its expectation that Macau's gaming industry's total revenue will increase by 5% to 6%, driven by a projected increase of 7% to 8% in revenue from the mass market and slot machines, while VIP room revenue is expected to decline by 5%. More importantly, the bank expects industry profits to increase by 6% to 7% year-on-year, finally exceeding the growth rate of revenue. In terms of shares, in the short term, the bank continues to be bullish on Sands China (01928), while in the long term, it prefers GALAXY ENT (00027), with target prices of 24.5 Hong Kong dollars and 50 Hong Kong dollars respectively, both rated as "buy."