Receivables on the books of some concessionaires are on the rise. Indicative of more competitive conditions?



There are a number of possible explanations for why net receivables are escalating in Macau.  But as the following chart shows, there can be no doubt that they have moved higher, and not just on an absolute basis.  Net trade receivables as a percent of VIP volume were up at 12/31/11 on a YoY and semi-annual basis at Wynn Macau and Sands China. 


MGM’s receivables have been pretty consistent.  Surprisingly, MPEL has shown a fairly consistent decline, even at 12/31/11.  Of course, both MGM and MPEL have been aggressive in junket credit for the past 18 months or so but it is encouraging that their receivable levels have not indicated any uptick in recent quarters.  




Looking at just Wynn Macau and Sands China – the two mature operators who provide enough disclosure for analysis – one can see the pickup at 12/31/11.  On a YoY basis, the average receivables % almost doubled while they were up considerably sequentially.




So what’s going on?  There are several explanations:

  • More junket credit – We’re pretty sure this is happening with some casinos now advancing up to 3 months of commissions, up from the traditional 30 days.  We think MPEL, Galaxy, and MGM have been doing this for awhile but LVS began to offer similar programs to select junkets late in 2011.
  • More direct VIP credit
  • Lower reserving – WYNN's allowance for doubtful accounts as a % of gross receivables dropped from 41% at YE 2010 to 36% at YE 2011.  LVS indicated on their recent earnings call that its reserve against gross casino receivables was 27% at the end of 2011 versus 42% in 2010.

Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more