Credit Suisse Upgrades SJM To Outperform, Downgrades Galaxy, MGM China To Neutral

Credit Suisse's Kenny Lau revised investment ratings on several Macau Casino & Gaming operators late Tuesday night. The analyst upgraded SJM to Outperform while downgrading shares of Galaxy Entertainment and MGM China to Neutral. Lau's note came ahead of third-quarter earnings results from the players within this sector. He advised sticking with "mass and high-roller." The analyst's gross gaming revenue growth estimate for 2013 was raised from 15.8 percent to 16.5 percent and the 2014 growth estimate was raised from 13.9 percent to 14.1 percent. Lau lowered his 2015 estimate for gross gaming sales growth from 15.8 percent to 15.5 percent. The analyst believes "the next Macau gaming stock outperformers should own some of these attributes:

Lau is expecting Sands China and Melco Crown

to garner the most annual growth in EBITDA for Q3, while MGM China's EBITDA will likely be down 11 percent from last quarter. "MGM China's market share will inevitably be under pressure until the opening of MGM Cotai in 1H16. Due to the investment in this Cotai project, we do not expect the company to increase the dividend payout ratio, despite its net cash balance of HK$2.5 bn and distribution of its first ever interim dividend," according to Lau.