Macau's gross gaming revenue fell 1.2 percent year-on-year to 21.89 billion patacas (HK$21.25 billion) in August, marking the third consecutive month of decline, according to figures from the Gaming Inspection and Coordination Bureau.
On a month-on-month basis, August revenue rebounded 8.1 percent from 20.26 billion patacas in July.
For the first eight months of the year, gross gaming revenue reached 169.05 billion patacas, up 3.7 percent from 163.05 billion patacas in the same period last year.
Morgan Stanley said August gaming revenue came in below expectations. While revenue growth recovered after the World Cup ended, the bank believes gaming revenue has stabilized at current levels.
The bank expects September gaming revenue to grow by as much as 8 percent year-on-year in a best-case scenario, helped by a lower comparison base as gaming revenue in the same month last year was affected by a typhoon.
Morgan Stanley expects third-quarter gaming revenue to fall 1 percent from a year earlier, compared with double-digit growth in the same period last year, which it said would continue to drive negative operating leverage and could lead to further earnings estimate cuts.
Following recent weakness in Macau gaming stocks, the sector is trading at around eight times its estimated 2026 enterprise value to earnings before interest, taxes, depreciation and amortization ,with a free cash flow yield of around 9 percent, according to the bank.
Morgan Stanley maintained its Overweight ratings on Wynn Macau (1128) and MGM China (2282), citing their attractive dividend yields and relatively lower downside risk to earnings estimates.
Shares of all six Macau casino operators closed lower on Tuesday, led by Galaxy Entertainment (0027), which fell 3.16 percent, while gaming equipment supplier Paradise Entertainment (1180) bucked the trend and rose 3.27 percent.
