MACAU: ON FURTHER REVIEW

Higher hold contributed over 10% of the 42% YoY growth.  November GGR should fall significantly MoM.

As previously disclosed, October gross gaming revenues (GGR) increased 42% YoY to $3.35BN.  With the detail in hand, we can confirm that while growth was strong, the month got a boost from good hold and an easy hold comparison from last October.  Total direct play this month was 6.3% of the market, compared to 7.5% last year.  The total market held at 3.05% vs. 2.70% in October 2010.  Normalizing for hold, October would have increased 30% YoY.  High margin Mass business increased 36%, just slightly lower than the 40-41% growth we’ve seen during the last 4 months.

As we approach the next 3 months of the year we expect YoY growth rates to decelerate, partly due to difficult hold comparisons and trends we are seeing in our sequential monthly projections (see “MACAU: EYE ON NOVEMBER” published on 11/2/11).  Hold rates for November 2010 through January 2011 ranged between 3.05% and 3.13%.  Normal hold levels would alone shave roughly 10% off YoY growth.

Y-o-Y Table Revenue Observations

Total table revenues grew 43% YoY this month, on top of 50% growth las­t October.  October Mass revs rose 36%; VIP revs grew 45%; and Junket RC rose 30%. 

LVS

Table revenues grew 5% only YoY – exhibiting the slowest concessionaire growth in the market, in-line with recent trends.  We’ll be keenly watching for a turnaround in November since we’ve heard that LVS has been extending additional junket credit and 2 new junkets are coming online at the Four Seasons this month.  Over the last 5 months LVS’s table revenues have grown at 14% while the market has grown 48% - roughly 30% of the market’s pace.

  • Sands was down 6% YoY, driven by low hold. The YoY decline was driven by a 15% drop in VIP which was somewhat offset by 12% increase in Mass.
    • Junket RC was up 21%
    • Sands held poorly in October and had a difficult YoY comp.  Adjusted for 14% direct play (15% in 3Q11), hold was about 2.05%, compared with 3.00% hold in October 2010 assuming 15% direct play (in-line with 4Q10). 
  • Venetian was up 8% YoY, driven by a Mass increase of 28% offset by a 4% drop VIP
    • Junket VIP RC fell slightly, down 1%
    • Assuming 23% direct play in the quarter (just slightly below the 24% we saw in 3Q11), hold was 2.99% compared to 3.12% hold in October 2010 assuming 19% direct play (in-line with 4Q10)
  • Four Seasons grew 17%YoY, driven by an 89% increase in Mass VIP revenues and a small 3% increase in VIP revenue. 
    • Junket VIP RC increased 10% YoY
    • While we believe that the property held low, the comparison was also very easy.  Assuming 36% direct play (which is close to the 38% in 3Q11 and implies a 19% sequential increase in average monthly direct play levels), hold was 2.65% in October, compared with a hold rate of 1.82% if we assume 54% direct play in October 2010 (in-line with 4Q10)

WYNN

Wynn table revenues were up 36%, which benefited from an easy hold comparison

  • Mass was up 23% and VIP increased 40%
  • Junket RC increased 11%
  • Assuming 10% of total VIP play was direct (in-line with 3Q11), we estimate that hold was 2.9% compared to 2.3% last year (assuming 11% direct play – in-line with 4Q10)

MPEL

Table revenues grew 49% - equally driven by Mass and VIP

  • Altira revenues rose 28% with Mass growth at 18% while VIP grew 29%, helped by an easy hold comparison
    • VIP RC increased 14%
    • We estimate that hold was 2.9% vs. 2.7% last year (direct play is not material at Altira)
  • CoD table revenue was up 62%, driven by 57% growth in Mass and 64% growth in VIP – helped by high hold and an easy comparison
    • Junket VIP RC grew 37%
    • Assuming a 13% direct play level, hold was 3.4% in October compared to 2.6% last year

SJM

Revs grew 15%

  • Mass was up 17% and VIP was up 14%
  • Junket RC was up 10%

Galaxy

Table revenues continued its streak of triple-digit gains, +201%; mass soared 340%, while VIP gained 186%

  • StarWorld table revenues grew 64% - exhibiting the best growth of any mature property
    • Mass grew 56% and VIP grew 65%, helped by high hold and an easy comp
    • Junket RC grew 28%
    • Hold was high at 3.1% compared to just 2.5% hold last October
  • Galaxy Macau's total table revenues were $339MM, 41% higher than September’s
    • Mass table revenues rose 29% MoM to $59MM
    • VIP table revenue of $280MM, a 43% MoM increase, helped by luck. Hold was 3.4% this month vs. 2.8% in September.
    • RC volume of $8.3BN, up 19% MoM

MGM

Table revenue increased 50% YoY, helped by high hold in the quarter

  • Mass revenue growth was 9%, while VIP grew 60%
  • Junket RC increased 24%
  • Assuming a direct play level of 8%, we estimate that hold was 3.6% this month vs. 3.0% in October 2010, also assuming direct play of 8% 

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

LVS

Share increased 40bps sequentially to 14.1%. This compares to 6 month trailing market share of 15.1% and 2010 average share of 19.5%

  • Sands' share ticked up 10bps to 3.5% off of all time lows in September
    • Mass rev share fell 30 bps offset by a 50bps improvement in VIP share
  • Venetian’s share fell 40bps sequentially to 8.1% share
    • VIP share fell 1% to 5.9%, below the prior TTM average of 6.8%
    • Mass share gained 1.5% sequentially to 15.5% - above the 14% average for the trailing 6 months
    • Junket RC fell 20bps to 4.7%
  • FS share improved 80bps to 2.0%
    • VIP share increased 1% to 1.9%
    • Mass share ticked down 10bps to 2.3%
    • Junket RC improved 20bps to 1.5%

WYNN

After hitting an all-time low in September market share, WYNN was the largest share gainer in October – gaining back 1.6% to 13.1% share - although still below their 6 month trailing average share of 14.2% and 2010 average share of 15%. Wynn’s share should continue to struggle with the opening of Sands Cotai Central in March and with the introduction of new junkets at the Four Seasons this month.

  • Mass market share fell 20bps at 10.3%
  • VIP market share increased 2.2% to 13.6%
  • Junket RC share was flat MoM at 13.5%, below its 6 month trailing average of 14.7% and 2010 average of 15.2%

MPEL 

Market share fell 1.5% points to 14.7%, below than its average 6 month trailing share of 15.2% but above its 2010 share of 14.6%.

  • Altira share fell 50bps to 4.7%, compared to a 5.6% average share in 2010; Mass share fell 10bps while VIP share dropped 1%. 
  • CoD’s share dropped 80bps to 9.9% driven by share losses in VIP that were partly offset by strength in Mass
    • Mass market share increased 1.1% points to 9.1% 
    • VIP share fell 1.5% points bps to 10.1%

SJM

In a reversal from last month SJM lost the most share in October, down 3.0% to 26.0%, their lowest share since August 2009 and below its 6-month trailing average of 29.2% and 2010 average of 31.3%.

  • Mass market share dropped 2.8% to 33.9% - an all-time low
  • VIP share fell 2.8% to 24.5%
  • Junket RC share ticked down 10bps to 28.3% - their lowest share since Sept 2009

Galaxy

Gained 1.3% share to 20.9%. October share compares with an average share of 10.9% in 2010 and a 6 month trailing average of 16.0%.

  • Galaxy Macau share gained 1% to 10.5%
    • Mass and VIP market share gained 90bps to 8.2% and 11.2%, respectively
    • RC share ticked down 20bps to 10.8%
  • Starworld lost 40bps of market share to 9.2%, 10bps above its TTM share of 9.1% pre-Galaxy Macau level.

MGM

Gained 1.1% to 11.2% due to an improvement in VIP share. October share compares with an average share of 10.3% in 2010 and a 6 month trailing average of 10.4%.

  • Mass share lost 120bps to 6.9% but was more than offset by a 160bps decrease in VIP share to 12.2%
  • Junket RC gained 60bps to 10.3%, above the property’s 2010 average of 8.4% and in-line with its 6 month trailing average of 10.4%

Slot Revenue

Slot revenue grew 18% YoY and increased $2MM sequentially.

  • As expected, Galaxy slot revenues grew the most with 309% YoY to a record of $16MM
  • MGM slot revenues had the second best growth at 24% YoY to $20MM – an all-time high for the property
  • Wynn slot revenues grew 11% YoY to $25MM
  • MPEL slot revenues grew 3% YoY to $22MM
  • SJM slot revenues grew 7% YoY to $14MM – down from $17MM in September
  • LVS slot revenues fell 3% YoY to $33MM

MACAU: ON FURTHER REVIEW - table

MACAU: ON FURTHER REVIEW - mass

MACAU: ON FURTHER REVIEW - rc