November Gross Gaming Revenue estimate revised upward to HK22-22.5BN, +31-34% YoY.
Average daily table revenue jumped this past week to HK$775MM, up from HK$698MM the rest of the month and only HK$664MM last week (Grand Prix). With only 3 days left in the month, total November GGR (including slots) should be in the HK22.0-22.5 BN range, up 31-34% over last year. Despite the likely double digit % drop from October, we would consider November a solid month. Remember that VIP hold % was high both in October 2011 and November 2010 and November is typically a seasonally slower month than October.
For market shares, LVS continues to gain share, as expected. Neptune went live at Four Seasons on November 1st and Sun City recently opened 24 VIP tables. Also, the company began advancing commissions to some junkets for up to two months which should spur volumes. We estimate LVS’s share in the past week increased to 16.3% - almost to the pre-Galaxy Macau level. However, we would've expected higher by this point which probably means VIP hold is a little low. WYNN’s MTD share continued to improve sequentially, gaining 60bps from last week but still remains below recent trend. In terms of hold, we believe LVS is holding low so they haven't gained as much share as they should/will, while WYNN is holding high which would explain why share has recovered a little bit since the beginning of November (1st two weeks share: 11.6%; last two weeks share: 14.5%).
As a reminder, while we are still bullish on Macau revenues, we remain concerned with the potential for more aggressive junket commissions/credit in the market. WYNN is definitely at risk here with their low commission structure. WYNN and Four Seasons overlap with Neptune, Sun City, David, and one other junket. Also, in terms of quality and service, Four Seasons is the most direct comp for Wynn/Encore.
Given the recent poor performance of the Macau stocks and lower expectations, we think they could rally over the near-term (trade basis) but the prospects of a junket war temper our intermediate (trend) enthusiasm.
