MACAU: IS VIP EVEN GROWING?

No question Mass is still generating sequential growth but VIP growth looks flattish since June.  Our 2012 growth projection of 10% has Mass leading the charge.

 

 

It may sound snobbish for us to turn our nose up to a month where Gross Gaming Revenues (GGR) grew 32% YoY, but November confirmed a negative trend that began around June.  Seasonally adjusted sequentially growth in Junket volumes (Rolling Chip or RC) has been fairly flat since June.  In other words, June was the last month where we saw a non-seasonal jump in GGR. 

 

RC in June of 2011 only fell 6% MoM while June of 2010 dropped 19%.  Since June of 2011, MoM growth has lagged 2010 significantly.  Using June as the base for each year, the 2nd half of 2011 lag is even more pronounced.  Looking at it a different way, the chart below shows that RC volume was actually lower at the end of November than it was in August on a 3 month moving average.  Since June was the first month of the 3 month average ending August 2011, that roughly confirms the MoM analysis.  Finally, November generated the 3rd lowest RC volume of this year, behind only January and April.  Interestingly, October 2011 – which was a record and viewed as a blockbuster month – experienced the slowest MoM growth since the financial crisis, and that was off of a low September 2011 base. 

 

MACAU: IS VIP EVEN GROWING? - macau1

 

2012 Projections 

As can be seen in the above chart, the good news is that the Mass business is still in an upward trajectory.  We expect that to continue.  For 2012, we are projecting Mass growth of 22% but VIP revenue growth of only 6%.  Our RC volume growth estimate is 5%, with approximately 11% growth in the first half of the year and low single digit growth in the second half.  This implies very little sequential growth in dollar volumes from current levels.  Given the macro environment and the tremendous growth in junket liquidity, credit, and volumes over the last few years, we think this is a reasonable, if not conservative, assumption.  While only a 10% YoY total GGR growth year could spook investors, profitability will still be strong and not far from consensus estimates, assuming there is no junket war.  Mass revenue is the key and we see tremendous long-term growth in this high margin business.

 

MACAU: IS VIP EVEN GROWING? - he2

 


Cartoon of the Day: Hard-Headed Bears

How's this for "hard data"? So far, 107 of 497 S&P 500 companies have reported aggregate sales and earnings growth of 4.4% and 13.2% respectively.

read more

Premium insight

McCullough [Uncensored]: When People Say ‘Everyone is Bullish, That’s Bulls@#t’

“You wonder why the performance of the hedge fund indices is so horrendous,” says Hedgeye CEO Keith McCullough, “they’re all doing the same thing, after the market moves. You shouldn’t be paid for that.”

read more

SECTOR SPOTLIGHT Replay | Healthcare Analyst Tom Tobin Today at 2:30PM ET

Tune in to this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more