MACAU: VIP VOLUMES TO BLAME FOR MAY'S SOFTNESS

As you already now, May gross gaming revenues (GGR) increased only 9% YoY.  Hold was not a factor but lower than expected VIP volumes were the main culprit to the soft month.  We believe the timing shift of the Dragon Boat Festival and May’s rainy weather played a role but not enough to explain the shortfall.  June looks like another high single digit growth month to us – probably not a catalyst for share appreciation.

 

The bad news is that VIP revenues grew only 2%.  May VIP hold percentage of 2.93% (adjusted for direct play), compared with 2.90% last May.  The good news is that Mass performed exceptionally well, up 36% YoY and 6% MoM.  Galaxy was the big winner, massively outperforming the market on VIP (despite near normal hold) and a stable mass business.  On the other hand, MGM massively underperformed across their VIP, Mass and Slots businesses.

 

Here are some takeaways:

 

Market

  • Mass revenues grew 36%, slightly below the average growth for the last 12 months.
  • VIP Rolling Chip (RC) volume and VIP revenues both decreased 2%
  • RC volume grew at the slowest rate since October 2012 when RC volume contracted 5
  • Slot revenue increased 6%, up from +4% in April but below the 9% average for the last 12 months.
  • Assuming consistent hold in both periods, GGR would’ve grown 9% YoY

MACAU: VIP VOLUMES TO BLAME FOR MAY'S SOFTNESS - m1

 

LVS

  • GGR grew 21% YoY, up from 13% in April but slower than the 32% growth for the last 12 months.
  • VIP revenues increased 4% and RC dropped 13% YoY as compared to VIP revenue growth of 18% and RC growth of 15% for the last 12 months.
  • The LVS properties held just above normal on VIP
  • Mass grew 45%, the highest of any gaming operator during May
  • Market share was above trend in Mass and Rolling Chip volume

 

WYNN

  • GGR dropped by 4%, significantly slower than the 14% growth for the last 12 months.
  • VIP revenues decreased 16% and RC dropped 17% YoY as compared to VIP revenue growth of 11% and RC volume growth of 16% for the last 12 months.
  • The RC contraction of 17% has not occurred since the 22% contraction in March 2013 and the 18% drop in July 2012.
  • WYNN held high on VIP
  • Mass growth was 36%
  • Slot revenue grew 29%, the market leader in May

 

MGM

  • YoY GGR growth dropped a shocking 11%, a rate not seen since the 18% contraction in October 2012
  • VIP revenues decreased 22% also the lowest since October 2012
  • RC declined 15%.  MGM’s RC business could be under more pressure if Wynn Macau decides to get more aggressive on commissions advancement to junkets
  • MGM held low in VIP
  • Mass growth was 31%
  • Slot revenue dropped 11%, the worst performance among the operators.
  • The weak VIP business pushed market share below recent trend

 

MPEL

  • GGR dropped 1% YoY and follows April’s 4% decline, a two consecutive month contraction not seen since July and August 2012.
  • VIP revenues contracted 17%, due to weakness at Altira
  • Held low on VIP
  • RC volume contracted 23% following April’s down 21% – we’ve been hearing decreased play from “casual” junkets
  • Mass grew 35%, just below the market

 

Galaxy

  • GGR increased 24% YoY
  • VIP revenues increased 25%, based on market leading results from Galaxy Macau
  • Rolling chip volume increased a massive 30%, again driven by Galaxy Macau
  • VIP hold was almost normal
  • Mass grew 28% - as compared to 37% for the last 12 months.
  • Slot revenues dropped 8%

 


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

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more