Macquarie: Downgrade of casino stocks' first quarter EBITDA forecast expected to continue dragging down profit margins due to ongoing competition.

Macquarie released a research report stating that the EBITDA forecast for the six major gaming companies in Macau for the first quarter of this year has been revised down by 3.5% to reflect low win rates in February and profit margin pressures. The expected year-on-year increase is 6%, which means that the industry is experiencing operational deleveraging relative to a 15% year-on-year growth in gaming gross revenue (GGR). The bank expects the competition for market share to continue this year, dragging down the profit margins of gaming companies. In the industry, the bank's top pick is still GALAXY ENT (00027) due to its strong property development projects, with a target price of 55.4 Hong Kong dollars and an outperform rating. Industry data shows that the average daily GGR for the week ending on April 11 was 663 million Macau dollars, up 8% year-on-year but down 3% weekly, mainly due to lower win rates. Assuming the average daily GGR for the rest of the month is between 680 million and 730 million dollars, the GGR for April will reach 20.2 billion to 21.1 billion dollars, an increase of 7% to 12% year-on-year. The bank expects the growth in GGR in the second quarter to slow down from 15% in the first quarter to 5.5%, as high base effects will start to appear from May onwards. At the same time, the bank maintains its full-year GGR forecast at 262 billion dollars, implying a 6% year-on-year increase.