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THE M3: SMOKING BAN; SISK RESIGNS

THE MACAU METRO MONITOR, SEPTEMBER 4, 2013

 

 

AMBROSE SO SAYS BAN ON CASINO SMOKING IS IMMINENT Macau Daily Times

Ambrose So, SJM's CEO said a total ban on smoking is imminent and that the gambling giant is not worried about the potential fall of its market share, as it is not "a key index".  So said that SJM is trialing smoking rooms in the smoking areas in its casinos, and the government encourages this practice.  However, he acknowledged that it is not easy for all SJM casinos to reach the government’s standard of air quality.  The CEO pointed out that some older casinos have lower ceilings, and that it is harder for those to pass the air quality test.  He urged the government to make special considerations and, if possible, exempt those gambling venues from air quality-related fines.

 

Moreover, So said that it would actually be more financially beneficial if the government simply declared a ban on smoking in casinos, so that operators do not need to buy extra equipment to cope with the interim period.

 

As for the issues surrounding the location of some slot machine venues, So said some venues would be removed in accordance with the government’s timetable.  SJM is now looking for new locations for these venues.  However, if the group cannot secure new sites, they will temporarily close the venues.  So is not worried about the revenue, as slot machines only account for a very small proportion of SJM’s profits.

 

SANDS CHINA EXEC DAVID SISK RESIGNS AMID SHAKE-UP WSJ

Sisk, formerly Sands China's COO, was asked to resign, said people familiar with the matter.  From the beginning, there was a power struggle between current CEO Ed Tracy and Sisk, who both aspired to become Sands China's new CEO, said one of the people familiar with the matter.  Tracy won the CEO appointment in July 2011.

 

Sisk's departure follows the resignation Friday of Hugh Fraser, who served as vice president of casino operations across Sands China's four Macau properties.  Fraser is moving to Australia to become the general manager of gambling operations at The Star in Sydney.  In June, Andrew Billany, formerly senior vice president of Sands China's high-end Plaza Casino and Paiza operations, left the company to become Senior Vice President of Operations for SJM Cotai.  LVS CFO, Ken Kay, stepped down on July 31.

 


KKD: ROOM TO RUN

We like KKD on the LONG side, as the company fits our strategy of looking for small cap growth companies with strong business models and growth prospects.  Over the past three years, the company has transformed itself into a strong regional brand and asset-light business with unique global growth potential.


Our KKD LONG thesis consists of three key tenants:

  1. International growth opportunity
  2. Accelerating U.S. unit growth
  3. The strong financial profile of the company

 

International Growth Potential


Since opening the first international store 11 years ago, international stores have grown to 532 and most recently, since 2007, have grown from only representing 31% of KKD’s total store count to approximately 69% today.  International revenues now account for nearly 43% of system wide sales.  In aggregate, Krispy Kreme stores are present in 21 countries outside of the United States and we believe this international presence and growth potential puts the company in a rare position within the restaurant segment.  The company plans to increase the number of international shops to 900 by January 2017.  This, alone, implies an increase in system wide sales of approximately +28% by January 2017.  As of the end of 2Q14, total franchise commitment for international development stands at 350.

 

Over the past three years, the majority of the international development efforts have been in Asia and the Middle East. In FY13, new international franchise agreements have already been signed with franchisees in Moscow, India and Singapore.  We will see further expansion and expect to hear about franchise efforts on new markets, including Europe and South and Central America, in the coming months. 

 

KKD: ROOM TO RUN - millions

 

 

Accelerating U.S. Growth Unit

 

The success of the international growth model is helping to jumpstart domestic unit growth.  Over the past three years, the KKD international franchisees have pioneered the initial development of smaller, satellite shop formats and this success has been translated to the U.S. growth model. 

 

In January, KKD opened up five of these smaller format shops in the U.S. and the results did not disappoint, as the company reported strong sales and operating performance from the shops.  The company plans to move forward with these smaller unit formats and plans to open five more during the remainder of FY14.  Importantly, we believe these new formats will sit well with the franchisee community and give them the confidence to incorporate these new stores into their expansion plans.  In July, KKD signed a 15-store development agreement for the Dallas market, which included the sale of its three existing stores in the market.  We expect to see many more arrangement similar to this, which should significantly increase the pace of U.S. store expansion.

 

Perhaps most impressive, the company is reporting that the 5 new, free-standing small factory shops currently in operation are seeing sales levels settling in around $30,000 a week.  With an initial investment of about $590,000 per store, this indicates a sales to investment ratio of 2.6 to 1, making it one of the best in the restaurant space today.

 

KKD: ROOM TO RUN - KKD chart2

 

 

Financial Strength


Over the past two years, KKD has generated $66 million in free cash flow and is estimated to earn an additional $31 million in FY14.  Furthermore, at the end of 2Q14, the company had over $60 million in cash and practically zero debt.  Combine this with the recent announcement of a $50 million stock buyback authorization and it appears as though the financial prospects of KKD are very promising.

 

 

U.S. Same-Store Sales


One of the issues we suspect will be a point of contention with some investors is the difficult same-store sales comparisons KKD will be facing.

 

In our view, the greatest opportunity for KKD has always been to sell more of the higher margin beverages.  Over the past couple of quarters, KKD has been seeing a significant lift in transactions and a shift in the beverage mix toward coffee products.  Though work is needed in order to drive more beverage sales, it appears as though the company’s strategy of connecting with the consumers through social media outlets is helping to drive sales and traffic through innovative LTOs.

 

Difficult sales comparisons are not new and are a known known by the investment community.  That being said, we believe KKD can weather the difficult comps without hurting its strong sales momentum.  2Q14 company sales trends were strong: +12.4% in May, +9.5% in June and +8.5% in July (despite being down for a couple of weeks, as the company lapped its 75th anniversary the previous year).  And, trends early in 3Q14 suggest the current momentum is continuing as same-store sales in the first week of August were up +5%, same-store sales in the second week of August were up +12% and same-store sales in third week of August were flat.  We believe that 3Q14 same-stores sales growth of +4-6% is a reasonable target.

 

KKD: ROOM TO RUN - KKD chart3

 

KKD: ROOM TO RUN - KKD chart 4

 

KKD: ROOM TO RUN - KKD chart 5

 

 

Returns Headed Higher


Currently, KKD generates some of the best returns on incremental capital in the restaurant space.  The company’s current structure, coupled with the capital-light model and accelerating franchise unit development, should allow for high returns to continue well into the foreseeable future.

 

KKD: ROOM TO RUN - KKD chart6

 

 

Equity Sentiment


On the surface, the sentiment setup on KKD looks rather positive as 70% of the analysts covering the stock have a “Buy” rating on it and short interest only comprises 3.7% of the float.  However, we would take the sentiment setup with a grain of salt, as the coverage of KKD is very limited.  Only 10 analysts are currently covering the stock as opposed to 25-30 analysts covering some of the other names in the restaurant space.

 

KKD: ROOM TO RUN - kkdsent

 

 

 

Howard Penney

Managing Director

 


Bullish Growth: SP500 Levels, Refreshed

Takeaway: Does US #GrowthAccelerating data support a stock market holding its TREND line? Today, the market’s answer to that is yes.

This note was originally published September 03, 2013 at 11:17 in Macro

POSITION: 12 LONGS, 5 SHORTS @Hedgeye

 

I finally caught a post-summer beach wave to the upside here – and for the right reasons; summer is over, and US growth expectations continue to make a comeback.

 

Post the best NSA rolling Jobless Claims print we have seen all year (last Thursday = -10.6% y/y), and a solid PMI Friday, we just got a barn burner of a New Orders print out of the ISM (63.2! for AUG). Good looking end to the world there.

 

Additionally, across our core risk management durations here are the lines that matter to me most right now:

 

  1. Immediate-term TRADE resistance = 1661
  2. Intermediate-term TREND support = 1630

 

So, does US #GrowthAccelerating data support a stock market holding its TREND line? Today, the market’s answer to that is yes. And if you look at the growthier components of the stock market (QQQ), the answer is a resounding yes.

 

The new bear case is going to be that they were so wrong on growth’s slope change in 2013 that its really bearish now (from a much higher price).

 

Meanwhile, the real bear case to be made in 2013 was in bonds. #RatesRising for the right reasons.

KM

 

Keith R. McCullough
Chief Executive Officer

 

Bullish Growth: SP500 Levels, Refreshed - keith1


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HUNTING FOR ASIAN EQUITY ALPHA: LONG SOUTH KOREA VS. SHORT CHINA?

Takeaway: With respect to the intermediate-term TREND, we like South Korean equities on the long side and Chinese equities on the short side.

SUMMARY BULLETS:

 

  • At 14.8% and 15.6%, respectively, China and South Korea represent the two largest geographic weights in the iShares MSCI Emerging Markets Index Fund (EEM). More importantly, we think the latter is poised to take market share from the former, as we believe the South Korean and Chinese equity markets are poised to diverge with respect to the intermediate-term TREND.
  • All told, we think South Korean equities look increasingly attractive with respect to the intermediate-term TREND, while the attractiveness of Chinese equities on that same duration is poised to roll over after a proactively-predictable dead-cat bounce in both market prices and Chinese economic data.
  • This view is supported by our quantitative risk management setup, as the KOSPI Index is bullish TREND and the Shanghai Composite Index is bearish TREND. As an aside, we think the latter index is likely to threaten a TREND line breakout over the next few weeks on the strength of what is likely to be the last month of sequentially accelerating growth data (SEP), but ultimately fail to confirm any move north of our 2,123 TREND line.
  • From an intermediate-term TREND perspective: Chinese growth is poised to roll over in 4Q as inflation continues to accelerate from a low base; South Korean growth should continue its solid trend of acceleration as inflation accelerates from an extremely low base.
  • From a long-term TAIL perspective: Structural banking sector headwinds are likely to continue to depress Chinese economic growth; South Korea’s corporate earnings outlook is increasingly complicated by the likely resurgence of Japan Inc.

 

***Tomorrow (Wednesday, September 4th) at 11:30am EDT, please join the Hedgeye Macro Team for a ~15min conference call titled “Paddling Upstream?: Navigating #EmergingOutflows”. On the call, Senior Analyst Darius Dale will host a live Q&A session regarding recent developments in EM financial markets and our outlook for those asset classes and the economies that underpin them. CLICK HERE to download the accompanying 80-slide presentation, which we will allude to throughout tomorrow’s call. We look forward to your participation and fielding any follow-up questions you might have.***

 

 

At 14.8% and 15.6%, respectively, China and South Korea represent the two largest geographic weights in the iShares MSCI Emerging Markets Index Fund (EEM). More importantly, we think the latter is poised to take market share from the former, as we believe the South Korean and Chinese equity markets are poised to diverge with respect to the intermediate-term TREND.

 

We’ll begin our exposition of this thesis with the assumption that you’re familiar with our latest work in the context of our #EmergingOutflows and #AsianContagion themes. To the extent you are not, we encourage you to review the aforementioned 80-slide presentation; we detail our outlook for the Chinese economy on slides 6-11, 38 and 57-72; we detail our outlook for the South Korean economy on slides 6-11 and 38.

 

With that knowledge in hand, we think now is the time to buy dips in the Korean equity market and that we’re in a 2-4 week window of loading up on the short side of Chinese equities again, as the current dead-cat bounce has become increasingly long in the tooth.

 

This view is supported by our quantitative risk management setup, as the KOSPI Index is bullish TREND and the Shanghai Composite Index is bearish TREND. As an aside, we think the latter index is likely to threaten a TREND line breakout over the next few weeks on the strength of what is likely to be the last month of sequentially accelerating growth data (SEP), but ultimately fail to confirm any move north of our 2,123 TREND line.

 

HUNTING FOR ASIAN EQUITY ALPHA: LONG SOUTH KOREA VS. SHORT CHINA? - Korea KOSPI

 

HUNTING FOR ASIAN EQUITY ALPHA: LONG SOUTH KOREA VS. SHORT CHINA? - China SHCOMP

 

HUNTING FOR ASIAN EQUITY ALPHA: LONG SOUTH KOREA VS. SHORT CHINA? - China Iron Ore  Rebar and Coal YoY

 

From a GIP perspective, the South Korean economy is likely to reside in Quad #2 for the balance of the year, while the Chinese economy looks to be transitioning from Quad #2 to Quad #4 in the upcoming quarter, which is a headwind for equity market appreciation.

 

HUNTING FOR ASIAN EQUITY ALPHA: LONG SOUTH KOREA VS. SHORT CHINA? - SOUTH KOREA

 

HUNTING FOR ASIAN EQUITY ALPHA: LONG SOUTH KOREA VS. SHORT CHINA? - CHINA

 

The aforementioned GIP forecasts are determined by our predictive tracking algorithms for each country’s respective growth and inflation statistics and, like any model, are subject to varying degrees of tracking error – though a lot less than whatever the sell-side has been using to forecast growth, inflation and policy deltas over the past 3-5 years!

 

As such, we must rigorously track the relevant high-frequency economic data for clues to the degree and directionality of said tracking error – to the extent there is any:

 

CHINA: GROWTH POISED TO ROLL OVER AS INFLATION ACCELERATES FROM A LOW BASE

 

  • The respective trends in the YoY deltas of the monthly averages of rebar, iron ore and coking coal, as well as the respective trends in Manufacturing PMI, New Orders PMI, New Export Orders PMI, Real Estate Climate Index, Industrial Production, Retail sales and FDI support an improving near-term growth outlook. The respective trends in the monthly average of China’s sovereign yield spread (10Y-2Y), Backlogs of Orders PMI, Non-Manufacturing PMI, Fixed Assets Investment, Total Social Financing, Monthly New Loans, Industrial Sales, Industrial Profits, M2 Money Supply, Consumer Confidence, Exports, Imports, the Trade Balance and sovereign fiscal expenditures all suggest the current uptick in Chinese growth may be short-lived.
  • The respective trends in headline CPI, Food CPI, headline PPI, Raw Materials PPI and the trend in the YoY deltas in the currency market all support a hawkish inflation outlook.
  • The trend in OIS with respect to the benchmark rate supports a demonstrably tighter monetary policy outlook, though we’d argue much of this is due to the market’s expectation of persistent liquidity constraints (more on this below).

 

<chart6>

 

HUNTING FOR ASIAN EQUITY ALPHA: LONG SOUTH KOREA VS. SHORT CHINA? - China PMI Table

 

SOUTH KOREA: GROWTH SOLIDLY ACCELERATING AS INFLATION ACCELERATES FROM AN EXTREMELY LOW BASE

 

  • The respective trends in Non-Manufacturing BSI, Employment, Retail Sales, Consumer Confidence, Capacity Utilization, CapEx, Construction Orders, Exports and Imports all support an improving growth outlook.
  • The respective trends in headline CPI and headline PPI both support a hawkish inflation outlook, as does the trend in the YoY deltas in the currency market.
  • The trend in OIS with respect to the benchmark rate supports a marginally tighter monetary policy outlook.

 

<chart8>

 

HUNTING FOR ASIAN EQUITY ALPHA: LONG SOUTH KOREA VS. SHORT CHINA? - South Korea BSI

 

In addition to tracking high-frequency economic data, we must also have a good handle on the idiosyncratic factors that may influence or dictate a country’s 1-3 year GIP outlook:

 

CHINA: STRUCTURAL HEADWINDS AREN’T FULLY UNDERSTOOD BY MARKET PARTICIPANTS – LET ALONE PRICED IN!

 

  1. Across the maturity curve, interest rate swaps continue to trade well above the current cost of capital in China. In the past, we’ve interpreted this market signal as a sign that monetary policy tightening was increasingly probable over the intermediate term. We don’t view that scenario as likely at the current juncture; rather, we believe the market sees what we see: a prolonged erosion of financial liquidity, at the margins, will continue to apply upward pressure to money market rates over the intermediate-to-long term.
  2. That erosion of financial liquidity can be further identified via recent activity in China’s local currency bond market. In the QTD, there have been 27.1B CNY ($4B) of pulled bond sales, while AUG’s 240.9B CNY of issuance is down -17% MoM. Moreover, 10Y AAA bond yields have widened +53bps QTD to a ~2Y high of 5.67% and the spread between AAA yields and Chinese sovereign yields just hit a 3M-high of 168bps wide. Lastly, China’s 10Y-2Y sovereign yield spread has widened modestly off its JUN mini-crisis spread lows, but it has yet to buck the trend of tightening that has been in place for over one year now.
  3. The mere fact that both ends of China’s sovereign debt market is selling off should be interpreted as supportive of our view that the Chinese economy will be increasingly liquidity constrained, at the margins, as NPLs – both of the reported and unreported (i.e. debt rollovers/evergreening) genres – accelerate sustainably. A dour secular outlook for “capital” flows via the trade surplus is also supportive of our liquidity constraint thesis.

 

HUNTING FOR ASIAN EQUITY ALPHA: LONG SOUTH KOREA VS. SHORT CHINA? - China 1Y OIS vs. PBoC Rates

 

HUNTING FOR ASIAN EQUITY ALPHA: LONG SOUTH KOREA VS. SHORT CHINA? - China 10 2 Spread

 

HUNTING FOR ASIAN EQUITY ALPHA: LONG SOUTH KOREA VS. SHORT CHINA? - CHINA REER

 

SOUTH KOREA: HOW WILL THE MARKET CONTINUE TO PRICE IN INCREASED COMPETITION FROM JAPAN?

 

  1. Just isolating its top three export markets, South Korea competes head-to-head with Japan in 41.6% of its exports, so naturally, the JPY’s -24.1% YoY decline vs. the CNY and its -21.3% YoY decline vs. the USD has weighted on the outlook for South Korean export growth. That’s a headwind for broader economic growth as exports are equivalent to 56.5% of South Korean GDP.
  2. Perhaps more importantly with respect to the thesis we are attempting to explicate, is the fact that an outlook for secular yen weakness directly calls into question the earnings outlook for KOSPI Index. Specifically, both South Korea and Japan are particularly exposed to the global CapEx cycle (Tech and Industrials) from an equity index perspective at 40.6% and 28% of total market cap, respectively (vs. a regional average of 20.2%).
  3. To the extent customers are competing on price in this naturally deflationary segment of the global economy, it can be argued that a meaningful portion of corporate profit growth in Japan (+24% YoY in 2Q vs. +6% YoY in 1Q) is likely to come at the expense of corporate profit growth in South Korea. It’s hard to be long and strong South Korean equities with respect to the long-term TAIL if you share our bearish bias on the Japanese yen (we think the USD/JPY cross can traverse its way to 125 over the next 12-18 months).

 

HUNTING FOR ASIAN EQUITY ALPHA: LONG SOUTH KOREA VS. SHORT CHINA? - South Korea vs. Japan Export Markets 

 

HUNTING FOR ASIAN EQUITY ALPHA: LONG SOUTH KOREA VS. SHORT CHINA? - South Korea vs. Japan Currency

 

HUNTING FOR ASIAN EQUITY ALPHA: LONG SOUTH KOREA VS. SHORT CHINA? - South Korea CapEx Cycle

 

All told, we think South Korean equities look increasingly attractive with respect to the intermediate-term TREND, while the attractiveness of Chinese equities on that same duration is poised to roll over after a proactively-predictable dead-cat bounce in both market prices and Chinese economic data.

 

We look forward to your participation on tomorrow’s flash call.

 

Darius Dale

Senior Analyst


MACAU: MORE DETAIL FOR AUGUST

As a follow up to our previous note...

 

 

August GGR grew 18% YoY to HK$29.85 billion (US$3.85 billion).  Mass, VIP, and slot revenues increased 44%, 8%, and 15% YoY, respectively.  VIP hold % (including direct play) was 2.89% - below trailing 24-month average of 2.98%.  With normal VIP hold in both periods, GGR growth would have been +23%

 

Here is the detail:

 

YOY TABLE OBSERVATIONS

 

Total table revenue grew 18% YoY.  Mass market growth actually accelerated at 44% growth.  VIP volume rose 16% while VIP revenue gained 8%.

 

LVS

LVS led the market in table win at +41%.  Mass revs soared 72% (highest growth in the market) while VIP RC grew 25%. Including direct play, we estimate that LVS held at 2.9% in August, in-line with last August, assuming direct play of 17% vs. 21% last year.  

  • Sands fell 16%, 1st decline since February 2013
    • Mass grew 17%
    • VIP revenue fell 41%, while RC fell 24%
    • Sands held at 2.1% vs 2.8% in the same period last year.  We assume 10% direct play in August vs 8% in August 2012.
  • Venetian grew 18% 
    • Mass increased 46%
    • VIP revenue fell 6%, 2nd consecutive month of declines
    • Junket VIP RC gained 25%
    • Assuming 28% direct play, hold was 2.9% compared to 3.7% in August 2012, assuming 30% direct play 
  • Four Seasons gained 45%
    • Mass revenue soared almost 200% on a comp of -33%
    • VIP revenue grew 28% and junket RC rose 9%. August hold (assuming 15% direct play) was 3.4% vs 2.8% in August 2012 when direct play was 16%.
  • Sands Cotai Central rocketed 157% higher
    • Mass jumped 190% 
    • VIP revenues grew 137% 
    • Junket RC gained 79%
    • If we assume that direct play was 10%, hold would have been 3.0% vs 2.2% in August 2012 when direct play was 9%. 

MPEL

MPEL gained 31% in table revenues.  Mass growth continued to excel at 69% while VIP growth was 17%. We estimate that MPEL held at 3.3% vs 2.9% last August.  Estimated direct play was 11%, in-line with last year, but up sequentially.

  • Altira table revenues grew 36%.  
    • VIP revs soared 41%, on a comp of -45%
    • VIP RC gained 6%
    • Mass gained 9%
    • We estimate that hold was 2.8%, compared to 2.0% in the prior year
  • CoD table revenues grew 29% YoY
    • Mass increased 78%, continuing its impressive streak of strong YoY double-digit gains since the property opened
    • VIP win grew 10% but RC was flat
    • Assuming a 16% direct play level, hold was 3.6% in August compared to 3.4% last year (assuming 15% direct play)

WYNN

Wynn table revenues grew 11%

  • VIP revenues grew 12%, while VIP RC increased 17% 
  • Wynn held at 3.3% (assuming direct play of 8%) vs 3.3% last August (assuming direct play of 10%)
  • Mass revenues gained 3%

MGM

MGM table revenues grew 18%

  • We estimate that hold was 2.9% adjusted for direct play of 7% vs hold of 3.1% last year assuming 8% direct play
  • VIP RC and Mass grew 25% and 32%, respectively

GALAXY

Galaxy table revenues slipped 1% on poor hold, 1st decline since April 2013.  VIP revenues declined 13% while RC volumes grew 11%.  On the bright side, Mass growth was strong at 43%.  Hold was 2.8% in August 2013 vs. 3.6% last year.

  • Starworld table revenues fell 2%
    • Mass soared 51%
    • VIP declined 10%.  
    • Junket RC rose 18%
    • Hold was 2.2% vs 2.9% last year
  • Galaxy Macau's table revenues was flat
    • Mass had another great month at 54% growth
    • VIP fell 14%
    • Hold was 3.3% vs 4.1% last July

SJM

Total table revenue grew 13%, with mass and VIP growth of 24% and 7%, respectively. RC volume gained 19%.  SJM held at 2.6% vs 2.8% last year.

 

 

SEQUENTIAL MARKET SHARE - July to August (property specific details are for table share while company-wide statistics are calculated on total GGR, including slots):

 

LVS

Market share slipped 10bps to 22.7%.  August’s share is above its 6-month average of 21.4% and better than its 2012 average share of 19.0%. 

  • Sands' share fell 90bps to 2.6%, its lowest ever.  For comparison purposes, 2012 share was 3.9% and 6M trailing average share was 3.2%.
    • Mass share dropped 60bps to 4.5%
    • VIP rev share fell 120bps to 1.6%
    • RC share lost 30bps to 2.0% 
  • Venetian’s share gained 60bps to 8.6%.  2012 share was 7.9% and 6 month trailing share was 8.3%.
    • Mass share increased 110bps to 14.5%
    • VIP share was unchanged at 5.5%
    • Junket RC share gained 50bps to 4.2%
  • FS gained gained 30bps to 3.8%.  This compares to 2012 share of 3.7% and 6M trailing average share of 3.0%
    • VIP was up slightly to 4.5%
    • Mass share gained 70bps to 2.4%
    • Junket RC gained 30bps to 3.5%
  • Sands Cotai Central's table market share fell 20bps to 7.3%, which compares to the 6M trailing average share of 6.5%.
    • Mass share was flat at 9.2%
    • VIP share fell 30bps to 6.4%
    • Junket RC share gained 30bps to 6.0%

MPEL

MPEL jumped 120bps in share in August to 14.4%. Its 6 month trailing share is 14.1% and their 2012 share was 13.5%.  

  • Altira’s share was flat at 3.3%, below its 6 month trailing share of 3.6% and 2012 share of 3.9%
    • Mass share slipped 10bps to 1.1%
    • VIP gained 20bps to 4.4%
    • VIP RC share fell 20bps to 4.7%
  • CoD’s share rose 130bps to 11.1%, above the property’s 2012 and 6M trailing share of 9.4% and 10.3%, respectively.
    • Mass market share gained 60bps to 12.9%, its highest ever
    • VIP share gained 150bps to 10.1%
    • RC share dropped 40bps to 7.3%

WYNN

Wynn GGR share was 11.6%, up 140bps MoM.  2012 average share was 11.9% and their 6M trailing average share has been 10.8%.

  • Mass share fell 140bps to 6.3%
  • VIP share gained 320bps on higher hold 
  • Junket RC share gained 30bps to 12.4%

MGM 

MGM’s market share gained 80bps to 10.3%, above its 6M and 2012 average of 10%

  • Mass share gained 30bps to 6.9%
  • VIP share soared 130bps to 11.8%
  • Junket RC gained 120bps to 11.6%

GALAXY

Galaxy's share lost 280 bps to 17.1%, below its 2012 average and 6-month average share of 19.0% and 18.7%, respectively

  • Galaxy Macau share declined 90bps to 10.7%
    • Mass share was flat at 10.3%
    • VIP share declined 130bps to 10.9%
    • RC share lost 130bps to 10.3%
  • Starworld share tumbled 210bps to 5.5%
    • Mass share fell 90bps to 3.2%
    • VIP share dropped 250bps to 6.7%
    • RC share fell 60bps to 9.3%

SJM

SJM share lost 50bps to 23.9%, below their 2012 average of 26.7% and their 6M trailing average of 25.0%

  • Mass market shares slipped 10bps to 26.5%
  • VIP share lost 100bps to 23.4%
  • Junket RC share rose 10bps to 28.2%

 

Slot Revenue

 

Slot revenue grew 15% YoY to US$155MM in August

  • LVS had the best YoY growth at 35% to $51MM
  • Galaxy grew 17% to $20MM
  • MPEL gained 12% to $26MM
  • WYNN gained 12% to $19MM
  • MGM gained 4% to $22MM  
  • SJM had the worst YoY slot performance for the 2nd consecutive month, -8% to $17MM

MACAU: MORE DETAIL FOR AUGUST - macau44


#RatesRising: Rinse and Repeat

In case you were at the beach last week and missed it, we'll fill you in on the earth-shattering news: The 10-year US Treasury yield? It corrected a whopping 4 basis points.

 

Unreal.

 

For the record, the 10-year is making yet another higher-low today trading back to 2.85%. There's no resistance up to 2.93%. Our Hedgeye immediate-term risk range is 2.71-2.93%.

 

Yes. We are still bearish on bonds. Emphatically. It's Hedgeye's #1 Q3 Macro Theme for good reason.

 

#RatesRising: Rinse and Repeat - 10Y

 

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