Analysis of the Impact of Record-High Passenger Traffic at Hengqin Port on Macau's Gaming and Tourism Industry and Valuations of Hong Kong-listed Macau Gaming Stocks

According to the latest data from the Hengqin Guangdong-Macao Deep Cooperation Zone, on the first day of the 2026 New Year holiday, Hengqin Port’s daily passenger traffic reached a record high of

• Mainland tourists to Macau exceeded
  100,000 person-times
  , accounting for
  71%
• Cross-border vehicles exceeded
  11,000 vehicle-times
  , with single-plate vehicles accounting for about
  63%

This data clearly indicates that cross-border transportation facilitation in the Guangdong-Hong Kong-Macao Greater Bay Area continues to advance, providing a solid passenger flow foundation for the recovery of Macau’s tourism and gaming industry.

Macau’s gaming industry showed a steady recovery trend in 2025:

• 2025 full-year gross gaming revenue was approximately
  227.8 billion Macau Pataca (MOP)
  , up
  9.1%
  year-on-year [1]
• December gaming revenue was 20.9 billion MOP, up
  14.8%
  year-on-year, recovering to about 91% of the same period in 2019 [2]
• 2026 expected gross gaming revenue is
  236 billion MOP
  [1]

• From January to November 2025, tourist arrivals to Macau reached
  36.5 million person-times
  , up
  14.4%
  year-on-year [1]
• During the Christmas period (Dec 20-25), tourist arrivals to Macau reached
  724,800 person-times
  [1]

As a key land port connecting Zhuhai Hengqin and Macau, Hengqin Port’s record passenger traffic directly improves the convenience of mainland tourists traveling to Macau, providing substantial support for gaming revenue growth.

• Macau’s gaming industry is undergoing a structural transformation from VIP halls to mid-market and high-end customer groups, with high-end customers supporting market performance (web search source).
• Non-gaming investment加码: Six gaming enterprises plan to invest
  118.8 billion MOP
  over 10 years to develop non-gaming industries such as culture and art, health and wellness, sports, etc. [4], promoting revenue diversification and long-term anti-cyclical capabilities.

Current valuations of Macau gaming stocks are attractive:

• 2026 EV/EBITDA ratio is about
  9x
  , significantly lower than the historical average of
  13x
  [3]
• Each 1x expansion in valuation multiple is expected to boost equity value by
  over 15%
  [3]

Hengqin Port’s record passenger traffic will further strengthen market expectations for sustainable recovery of gaming revenue, which is expected to drive valuation repair from low levels.

Main Macau gaming stocks’ investment ratings and target prices (Morgan Stanley report):

• Galaxy Entertainment
  : Net cash position and high dividend potential, market share growth, 0% franchise fee, with advantages in cost structure and shareholder returns [5].
• Sands China
  : Stable market share, ~5% franchise fee, benefits from recovery of mid-market and high-end customer groups [5].
• MGM China, Wynn Macau
  : Higher franchise fee ratios paid to parent companies (~15% and ~14.1% respectively) pressure profit margins, EBITDA expectations are under pressure, and ratings are constrained [5].
• SJM Holdings
  : Relatively lagging business transformation and profit repair, lower rating.

• High growth in Hengqin Port passenger traffic drives continuous recovery of tourist arrivals to Macau.
• Expectation of double-digit growth in gaming revenue (2025 full-year ~+9.1%) [1].
• Non-gaming investment promotes revenue structure diversification and long-term value enhancement [4].
• Continuous advancement of Guangdong-Macao deep cooperation, gradual release of cross-border transportation facilitation dividends (web search and infrastructure news).

• Uncertainties in macro and policy environment (including gaming policies and Sino-US relations etc.) [4].
• Some individual stocks face profit pressure due to increased franchise fees (e.g., MGM, Wynn) [5].

Based on industry and individual stock fundamentals differentiation, the strategy suggests:

• Preferred Targets
  : Galaxy Entertainment (00027.HK), Sands China (01928.HK). Both companies have increasing market share, lower franchise fee ratios, and better shareholder returns.
• Neutral to Cautious
  : MGM China (02282.HK), Wynn Macau (01128.HK), pay attention to the impact of their franchise fee costs on profit margins.
• Prudent Wait-and-See
  : SJM Holdings (00880.HK), pay attention to its business transformation progress.

The record-high passenger traffic at Hengqin Port is an important signal for the recovery of Macau’s tourism and gaming industry. Combined with the continuous recovery of gaming revenue in 2025 and accelerated non-gaming investment, Macau gaming stocks have room for valuation repair. At the individual stock level, it is necessary to focus on differences in market share, franchise fee structure, and shareholder returns, and prioritize targets with cost advantages and cash flow support.

[0] Jinling API Data
[1] Yahoo Finance - “Macau 2025 Gaming Revenue Up 9.1%, December Up 14.8% YoY” (https://hk.finance.yahoo.com/news/澳門2025年博彩收入升9-1-12月按年升14-8-062144474.html)
[2] Lianhe Zaobao - “Macau December Gaming Revenue Growth Unexpectedly Slows, Below Market Expectations” (https://www.zaobao.com.sg/finance/china/story20260101-8039671)
[3] Yahoo Finance - “《Big Bank》JPMorgan Expects Q4 Macau Gaming Revenue Up to 19% YoY, Likes Sands…” (https://hk.finance.yahoo.com/news/大行-摩通料第四季澳門博彩收入最多按年升19-看好金沙中國及銀娛-022605602.html)
[4] Tencent News - “25th Anniversary of Macau’s Return: How Will the Gaming Industry Transform? 2049: What Will the Next 25 Years Be Like?” (https://news.qq.com/rain/a/20241222A05FGZ00)
[5] Yahoo Finance - “《Big Bank》Morgan Stanley Downgrades MGM China (02282.HK) to ‘In Line with Market’…” (https://hk.finance.yahoo.com/news/大行-大摩下調美高梅中國-02282-hk-評級至-045633624.html)