JUNE MACAU DETAIL

MPEL, Wynn Macau, and MGM Macau look like the best bets to beat Q2. Galaxy Macau off to a weak start.
 

Total gross gaming revenues (GGR) were $2.59 billion, up 52% over June of last year.  June market hold was 2.77%.  If we normalize hold for both June 2011 and June 2010, the market would have grown 56%.  VIP hold percentage for the market was actually a little lower than last year and a little lower than normal so the month could’ve been even better.  Importantly, high margin Mass revenue grew over 40%, marking its best YoY growth month since May of 2010.  Despite the sequential 15% decline from May, June was a terrific month all around.  Remember that June is typically slower due to May’s Golden Week celebration, 1 extra day, and high hold.  We’ve got our eyes and ears open for a VIP slowdown but so far we haven’t seen it.

In terms of market share, Galaxy was the big winner, obviously, with the opening of Galaxy Macau in mid May.  However, the property’s first full month was disappointing.  More on this later.  Wynn held up the best among the existing concessionaires with its market share actually up slightly in June versus its 6 month average.  SJM fared the worst but some of that was due to low VIP hold in June.  Probably more importantly, on the Mass side, MPEL actually gained 70bps of share from its 6 month average, representing the only concessionaire other than Galaxy to post a gain.  Consensus was that MPEL was most at risk with the opening of Galaxy.  Whoops.  SJM and LVS led the Mass share decline.

The Galaxy numbers look like a disappointment.  We’re pretty sure management was expecting HK$350 million in monthly Mass revenue and they came in at HK$260 million.  On a positive note, Starworld was barely impacted.  We wonder if investors will make any read throughs to Lots 5/6 and a potential disappointment there too.  We’ve maintained that despite the quality of the Galaxy facility, the property could struggle on the Mass side given managements’ relative inexperience in running a Mass property.  That now appears to be the case.

After sifting through the June numbers, LVS wasn’t as good as advertised by its total GGR number.  VIP hold percentage was very high.  VIP chip volume share actually declined 210bps from its 6 month average and was up less than 5% YoY compared to the market at +65%.  On a same store basis (excluding Galaxy Macau), market VIP volume still increased 55%.  LVS continues to struggle in the junket segment despite its recent efforts.  Impressively, MGM, Wynn, and MPEL grew its VIP Chip business 136%, 74%, and 64%, respectively, despite the opening of Galaxy.  On the Mass side, those three companies grew their Mass business 31%, 63%, and 63%, respectively, while LVS only grew 23%.

We are still working on updating our models but it appears that all of the US operators will beat consensus Q2 EBITDA estimates handily with MPEL leading the way.

Y-o-Y Table Revenue Observations:

Total table revenues grew 53% YoY this month, compared with 64% growth last June.  June Mass revs rose 41%; VIP revs grew 58%; and Junket RC soared 65%.  June growth in each table category accelerated from that of May.

For the 4th straight month, LVS table revenues grew the slowest - an unimpressive 12%.

• Sands recovered in June, up 27% YoY, driven by a 29% rise in VIP and 23% increase in Mass
  • Junket RC was up 12%
  • Sands held pretty high.  Adjusted for 10% direct play (in-line with 1Q11), hold was about 3.3%, compared with 2.8% hold in May 2010, assuming 14% direct play (in-line with 2Q10). 
• Venetian was up 32% in June, similar to May's growth. Mass rose 27%, while VIP was 34% higher
  
  • Junket VIP RC barely grew, up 3%, even off of an easy -1% comp
  • Hold was very high in June at 4.3%, based on 19% direct play (compared with 18.7% in 1Q11).  In June 2010, hold was 3.0%, assuming 24% direct play.
• Four Seasons was the biggest loser for LVS, down 65% in total table revenue.  VIP revs tumbled 75% but hold was a measly 1.1%, assuming 40% direct play, and hold comparisons were difficult (3.4% hold in June 2010 with 50% direct play)
  
  • Junket VIP RC decreased 8%.

Wynn table revenues were up 34%

• Mass was up 63% and VIP increased 29%
• Junket RC soared 74%
• Assuming 10% of total VIP play was direct, we estimate that hold was 2.7% compared to 3.7% last year (assuming 11% direct play)

MPEL table revenues grew 61%, driven by Mass growth of 63% and VIP growth of 61%

• Altira was up 58% with Mass up 30% while VIP ballooned 60%
  • VIP RC soared 58%
  • We estimate that hold was 3.1%, similar to that of last year
• CoD table revenue was up 64%, driven by 70% growth in Mass and 61% growth in VIP
  • Junket VIP RC grew 70%
  • Hold was fairly low, at 2.3% assuming 14% direct play.  Last June, hold was also 2.3% assuming 18% direct play.

SJM revs grew 50%

• Mass was up 22% and VIP was up 65%
• Junket RC was up 63%

Galaxy table revenue skyrocketed 124%. Mass went up by 213% and VIP rose by 112%.

• StarWorld table revenues grew 43%
  • Mass grew 51% and VIP grew 43%
  • Junket RC grew 27%
  • Hold was normal at 2.8%
• Galaxy Macau's total gaming revenues were 160MM, 43% higher than May (opened for 16 days)
  
  • Mass table revenue grew to 34MM
  • VIP table revenue of 126MM with RC volume of $3,906MM, which means hold (assuming no direct play) was 3.2%.

MGM table revenue was up triple digits again, growing 114%

• Mass revenue growth was 31%, while VIP ripped 148% higher - the highest VIP rev growth among the concessionaires
• Junket RC grew 136%, the 10th straight month that MGM has led in growth for this category
• Assuming direct play levels of 13%, we estimate that hold was 2.7% this month vs. 2.6% in June 2010

Sequential Market Share (property specific details are for table share while company-wide statistics are calculated on total GGR, including slots):

LVS share in June rose 20bps sequentially to 15.8%. This compares to 6 month trailing market share of 16.8% and 2010 average share of 19.5%

• Sands' share rebounded 1.1% to 5.1%, after hitting an all-time low in share last month
  
  • The increase in share was primarily attributed to a 140bps improvement in VIP rev share
• Venetian’s share ticked up 10bps to 9.5% share
  • VIP and Mass share were relatively unchanged
  • Junket RC decreased 1.2% to 4.2%, a new all-time low
• FS share fell 90bps to 0.9%, tying a record low
  • VIP share dropped 110bps to 0.7%
  • Mass share decreased 60bps to 1.5%
  • Junket RC share rose 10bps to 1.1%

WYNN share gained 2.1% to 15.3%, driven by easy hold comps.  June’s share is a little above its 6 month trailing average share of 15.1% and 2010 average share of 14.9%.

• Mass market share increased 60bps to 11.3%
• VIP market share rebounded 2.9% to 16.2% sequentially
• Junket RC share rose 10bps to 15.8%, above its 6 month trailing average of 14.8%

MPEL decreased to 13.9% compared to an average 6 month trailing share of 15.0% and 2010 share of 14.6%.

• Altira regained all the share it lost in May to 6.0%, compared to 5.6% average share in 2010
• CoD’s share fell 1.2% sequentially to 7.8%. lowest since January 2011
  • Mass market share was roughly unchanged at 10%
  • VIP market share decreased 1.6% to 7.1% while Junket RC share decreased 0.6% sequentially to 7.8% 

SJM was the biggest share loser in June, falling 3.3% to 29.1%, below its 6-month trailing average and 2010 average of 31.3%. But hold was only 2.5%, in-line with last year's.

• Mass market share decreased 1.7% to 36.3% while VIP share tumbled 4.5% to 27.5%
• Junket RC share fell 1% to 32.4% from 33.4% in May

Galaxy continued its momentum from Galaxy Macau, gaining 2.2% to 15.4%, its highest share since Oct 2007. June share compares with an average share of 10.9% in 2010 and a 6 month trailing average of 10.7%.

• Galaxy Macau garnered 6.5% market share on a full month of operations, up from 2.9% in May
  • Mass market share gained 270bps to 5.6%, VIP share gained 260bps to 6.7% and RC share gained 270bps to 6.1%
• Starworld's market recovered 30bps to 8.1%, just 10 bps below its pre-Galaxy Macau level
  
  • Mass market share gained 70bps to 2.9% while VIP share rose 30bps to 9.7%

MGM's share fell 90bps to 10.5%, erasing its gains from May.  June share compares with an average share of 8.8% in 2010 and a 6 month trailing average of 11.2%.

• Mass share decreased 90bps to 7.8%
• VIP share decreased 80bps to 11.2% - still the 2nd highest property share (that we track) after Wynn/Encore
• Junket RC decreased 80bps to 10.7%, materially above the property’s 2010 average of 8.4% and its 6 month trailing average of 10.8%

Slot Revenue:

Slot revenue grew 37% YoY in June to $112MM, down 16% sequentially

• Galaxy slot revenues grew at a white hot pace of 467.2%, reaching $8MM
• Wynn slot revenues fell sequentially to $9MM to $23MM
• MGM fell $4MM sequentially to $15MM
• MPEL’s slot revenue fell sequentially $6MM to $19MM
• SJM’s slot revenues grew $3MM sequentially to $18MM
• LVS continues to grow the slowest at 3% YoY as slot revs fell $6MM sequentially to $26MM