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If VIP can just hold steady in the face of the China tightening, even the back half of 2011 will show significant growth.

After an astonishing growth rate of 58% in 2010, who would’ve thought Macau would be on track for 43% growth in 2011?  Not anyone who is being honest.  Maybe even more impressive is that 2H could grow almost as much as 1H, 41% vs 44%, despite tougher comparisons.

Could growth be more?  Certainly.  In fact, our 43% growth projection only assumes flat volume levels, seasonally adjusted, going forward from May/June.  In other words, we are not assuming any sequential growth.

Could growth slow?  Again, certainly.  As we wrote about in our 05/22/11 note “A VIP SLOWDOWN IN THE CARDS?”, VIP volumes could slow this summer due to the lagging relationship to China tightening.  We haven’t seen that yet as June volumes appear to be in line with May after the normal seasonal adjustment.  We will be watching the weekly data closely for any indication of a slowdown.

MPEL remains the best way to play Macau in our opinion.  With its valuation discount and low expectations and EBITDA estimates, the positive catalysts could have a big impact on the stock.  Some of these catalysts include progress on Macau Studio City, additional junkets at City of Dreams, a huge Q2 beat, and a smaller than expected impact from Galaxy Macau going forward.