Lyon: Galaxy Entertainment (00027) and Sands China (01928) are the top choices for Macau gaming stocks.

Lyon releases research report, expecting Macau gaming industry's EBITDA to grow by 7% to $2.067 billion in the first quarter of this year, benefiting from a 14% increase in gaming revenue. Although growth is driven by the high-end market, the bank expects industry profit margins to not expand, mainly because in the continued intense competition, VIP win rate is unlikely to exceed normal levels. The bank has updated profit forecasts for various gaming enterprises to reflect the latest assumptions on rebates, operating expenses, and non-gaming revenue, and has correspondingly lowered target prices. GALAXY ENT (00027) and Sands China (01928) remain top picks in the industry. Lyon is optimistic about Galaxy's stable balance sheet, market share, and profits; while Sands provides the best visibility in dividend growth. The bank has downgraded the rating of WYNN MACAU (01128) from "outperform the market" to "hold," believing that its earnings have limited further upside.