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We use a couple of different assumptions to project 2011 growth.

Based on the first few months of 2011, Macau should be set for another terrific year of growth.  While undoubtedly a slowdown from the growth rate generated in 2010 – 58% is pretty tough to top – we think investors would be happy with 25%+ every year.

So, 25% is our low estimate for 2011 gaming revenue growth.  We derive this growth rate based on our March projection of HK$18 billion (based on two weeks of data), carried forward and seasonally adjusted for the remaining months of the year.  This low case estimate assumes no growth off of the March level except for normal seasonality. 

Our base case uses the February/March seasonally adjusted average as the base and uses the same methodology as above.  Under this scenario, we would project 2011 gaming revenue growth at 32%.  Our high estimate is the same as the base case but assumes that revenues grow an additional 9.5% (0.8% per month sequentially) throughout the year for total 2011 growth of 36%.  Current consensus China GDP growth estimates for 2011 is 9.5%.

Of course, a lot can happen to force revenue growth outside of the 25-36% range.  A bear might say that Beijing’s attempts to rein in inflation and liquidity will impact VIP volumes.  Possible – it has happened in the past but Beijing has been tightening for 9 months and volumes continue to expand.  A bull would point out that Mass growth is typically at least the rate of GDP and market penetration (visitation).  Good point – visitation continues to rise, pushing Mass revenue growth beyond just GDP-fueled revenue per visitor. 

We are also not adding in any incremental growth from the opening of Galaxy Macau which should grow the market.  The new Galaxy property on Cotai will add 10% to table supply and should detract from same store revenue, unless the property is an absolute smashing success.

Here are our estimates: