ANOTHER SOFT WEEK IN MACAU

August is tracking a little below last year month to date. Mass business under scrutiny.

THE DATA 

Last week’s Macau table revenues were HK$5,425 million (6 days) – an amount that has occurred frequently over the past 2 years.  However, we believe the number is close to actual.  On a per day basis, table revenues were slightly below the recent trend - averaging $904 million, down 9% from the comparable period last year.  Month to date average daily table revenues fell 4% from last year.  The early chatter indicates that VIP hold percentage may actually have been high last week, so volumes were potentially even more disappointing.  We expect full month August gross gaming revenues (GGR) to be slightly down YoY.

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MASS COMMENTARY

Following July’s sharp deceleration in YoY Mass growth to +17% (in line with our Mass Decelerating call), all eyes are on this high margin segment.  While we continue to believe that YoY Mass growth will decelerate from 1H 2014, August should look a little better than July. However, we remain concerned with Premium Mass margins and a question from an analyst seemed to indicate that the business is getting more competitive.  Galaxy denied that they are more aggressive with Mass rebates but wouldn't deny that it is happening in the market. We highlighted this as a risk and noted that competitive pressure in Premium Mass may have been a factor in across the board disappointing Q2 margins. We're concerned.  

MARKET SHARES

The previously mentioned high market hold seems to be concentrated on Cotai.  We're hearing LVS and MPEL's City of Dreams held well thus far in August.  Indeed, both market shares increased relative to trend, with LVS up dramatically. Galaxy remains below recent trend thus far in August and we think it may be VIP volume related.  Remember that Galaxy's VIP share in Q2 jumped dramatically due to higher volumes so the comp is difficult.

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