Analysts DS Kim, Mufan Shi, and Selina Li said in a Sunday note that “this suggests the reopening recovery is still ongoing”, which they think should help mitigate the potential impact of cyclical headwinds from China’s macroeconomic and consumption trends.

Mass gaming demand, which serves as the key earnings driver, has experienced further improvement compared to the third quarter, allowing more gaming operators to recover beyond pre-Covid levels.

The report also noted that third-quarter mass GGR increased 12 percent quarter-on-quarter, driving a 15 percent quarter-on-quarter growth in industry EBITDA for the same period.

The third-quarter overall margins were slightly lower than expected, as EBITDA was in line with expectations despite moderately better-than-expected revenues. The analysts attributed it to higher-than-expected operating expenses and seemingly increased reinvestments by some gaming operators.

J.P. Morgan said that the rise in operating expenses was associated with new hotel openings and increased events, which included not only concerts and shows but also exhibitions, sports-related events, and private gatherings.

The analysts believe that gaming operators are currently in a “trial and error” stage to identify which events yield positive outcomes for the gaming business.

Over time, they expect these events to contribute positively to EBITDA, especially when factoring in indirect benefits from the gaming side.

The J.P. Morgan analysts “feel more bullish” on Macau stocks now compared to a month ago, primarily due to the combination of unchanged fundamentals, more favourable prices, and washed-out expectations.

The analysts are inclined to accumulate these stocks during market dips “to enjoy strong cash flows and the ongoing recovery momentum”.