June is likely to be another soft month in Macau – watch out for week 2
CALL TO ACTION
Macau stocks face an uphill battle over the near term. June should be another single digit growth month and July may be only marginally better. In this note we look at the weekly June comparisons. We caution investors that week 1 could be a head fake as the 1yr/2yr comparison quickly progresses to the most difficult in week 2. We are cautious on the Macau stocks but most favorably disposed toward WYNN for safety reasons and the property’s ability to ratchet up its VIP business in a flat market.
THE SETUP
June is a tough comp and we were already projecting 9-11% before May’s softness emerged. The weekly progression is quite interesting. As can be seen on the following chart, the first week is a relatively easy comp followed by a very difficult comp in week 2. Whether the Dragon Boat Festival timing shift (6/12/13 to 6/2/14) is important is debatable. What is clear is that – assuming normal hold – week 2 and 2H of June numbers are likely to look pretty weak on a YoY basis and could further erode investor sentiment. Weeks 3 and 4 individually cannot be relied upon in our opinion since week 3 contained a “placeholder” revenue number in both 2012 and 2013 so week 4 was a catchup in each June. However, combining the weeks is instructive and shows a tough 2H comparison.
