MACAU UNDER THE HOOD - OCTOBER

Strong metrics should carry into November.

Consistent with what we heard anecdotally, the underlying Macau metrics look even better than the great headline of 32% YoY growth.  The upside to analysts’ initial expectations of 15-20% growth was broad based.  Hold was normal and Mass was off the charts.  VIP volume and revenue growth was at 2 yr highs.  Going forward, we think November could be another 20%+ growth month.  Even December, which confronts a very difficult 20% comp, could be up in the mid-teens.

Looking at the concessionaires, LVS performed much better than the headline sequential share decline had indicated.  In reality, October was one of the best months of the year for LVS.  WYNN looks like a same-store growth story again.  In terms of market shares, SJM and Galaxy were the clear winners.  Our favorite stocks remain WYNN and LVS.  

We will have a more detailed note out later but here are our initial takeaways:

Market

  • Including estimated direct play, VIP hold was a normal 3.04% and slightly higher than last year
  • Assuming the same hold % in each period, GGR would’ve grown 27% vs actual of 32%
  • Mass grew a whopping 45%, the highest YoY growth in almost 2 years
  • Rolling Chip volume climbed 21%, the most in almost 2 years as well
  • VIP revenue accelerated 28%
  • Slots were the laggard but still grew 10%, slightly above the YTD average

LVS

  • Overall share fell to 20.3%, its lowest level of the year.  However, the underlying metrics suggest this was actually a terrific month for LVS.
  • However, Mass share increased 130bps from the trailing 3 month average to 31.0% - its highest Mass share since May of 2009
  • LVS held very low on VIP.  Including direct VIP, we estimate hold was only 2.25%, 65bps below normal.
  • So while Rolling Chip volume grew 34% (the 2nd highest of the year), VIP revenue only grew 8%. 
  • Rolling Chip volume share was also the 2nd highest of the year

WYNN

  • Grew GGR 35%, the highest growth rate in 2 years
  • More importantly, Mass grew 29% (also the highest in 2 years)
  • Hold % was normal but significantly above last year
  • Mass share was in-line with recent trends but we expect that to grow with the more aggressive marketing and promotional push at the property

MPEL

  • MPEL’s share continued to decline, driven again by VIP volume
  • Mass share was fairly consistent with trend but Rolling Chip volume share hit its lowest level since November 2007, pre-City of Dreams
  • Hold percentage was normal and in-line with last year
  • On a YoY basis, MPEL’s Mass revenue growth led the market at 77% and was the highest rate since March of 2012 – no issues with their Mass business for now
  • Rolling Chip volume only grew 6% YoY

MGM

  • MGM share at 9.1% fell well below recent trend
  • Hold was below normal in both periods
  • Mass and Rolling Chip share was also below recent trend
  • GGR YoY growth was in-line with the market
  • Overall, MGM looks good on a YoY basis but sequentially weaker

GALAXY

  • Galaxy recorded the biggest sequential jump in share driven mostly by high hold percentage although volumes were strong
  • Hold percentage was well above normal and last year
  • Galaxy had the highest YoY GGR growth rate among the operators at 44%, again driven by high hold %

SJM

  • GGR share at 26.0%, its highest since March driven by high hold
  • GGR grew at the highest rate in 2 years

MACAU UNDER THE HOOD - OCTOBER - macau