UBS Equities-APAC Focus Macau Gaming _Premium Positioning Key to Share G...-117441892

ab25 August 2025Global ResearchMacau GamingAPAC Focus: Premium Positioning Key to Share GainThe game is changing in Macau, as hotel room capacity growth ceases to be the main driver of market share. Changes in gaming table allocation, and premium product and service positioning, attractive player incentives and a premium-focused marketing strategy have emerged as the key drivers of market share after COVID-19. The base mass segment continues to be challenged by onshore tourism competition and the macro environment in China. As the gaming market continues to premiumise, we expect premium operators such as Wynn Macau and MGM China to be able to maintain or gain market share, and their current c21% valuation discount (0.5SD below two-year average) to the larger operators Sands and Galaxy to narrow. We upgrade Wynn Macau from Neutral to a Buy rating and raise Wynn Macau and MGM China price targets 38% and 25%, respectively. Premium operators warrant a re-rating over mass oriented operatorsWe raise our Macau gross gaming revenue (GGR) growth forecast to 12% YoY in H225 from 7% YoY, and upgrade Wynn Macau from Neutral to a Buy. Premium segment demand reaccelerated in the past four months due to new high end room capacity, entertainment events, increased marketing activities and positive wealth effects. We expect premium operators Wynn and MGM to benefit the most, despite a lack of room capacity growth, as supported by MGM's track record in sustaining market share gains in the past two years. This contrasts with market expectation of Wynn and MGM losing share due to competitive supply in the market. Base mass segment capped by structural competition and macro headwindsThe base mass segment has lagged premium mass growth for the past two years. We believe the structural increase in tourist attractions in mainland China will continue to cap the base mass segment in Macau. The number of "5A" top ranked destinations in mainland China increased 28% compared to 2019, implying competition for Macau to attract low-spending visitors. This has somewhat resulted in oversupply of base mass hotel rooms (Macau IR hotel room inventory is up 15% in 2025 vs. 2019, while the number of overnight visitors recovered to only 86% of 2019 levels as of July 2025). Valuation: the sector trades at 8.8x 2026E EV/EBITDAThe sector is trading at 8.8x 2026E EV/EBITDA, 0.5SD below two-year average. We raised our PTs by an average c19%, and revised up the PTs of Wynn, MGM, Sands PTs by 21-35%, driven by our higher EBITDA estimates and target multiple, and leverage effects. Wynn, MGM and Galaxy are our top picks. This report has been prepared by UBS Securities Asia Limited. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES, including information on the Quantitative Research Review published by UBS, begin on page 32. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of in