Takeaway: VIP and Mass slowing continues, we expect additional mass deceleration owing to increased margin pressures

The GGR decline of 12% was only part of the story


  • Expectations for September market wide GGR ratcheted lower following August’s details, as a result September’s GGR decline of 12% was in line with recently revised lower expectations.  
  • Mass revenue growth was 15%, confirming our Mass Decelerating thesis for 2H 2014 and we expect additional deceleration during Q4 2014 and Q1 2015.
  • We remain concerned with the potential for continued margin pressure as labor costs continue to escalate and player reinvestment rates rise. 
  • While stock valuations look attractive but we don’t see any positive catalyst on the near term horizon.
  • We remain cautious on the Macau stocks with the exception of Galaxy.



Macau Market:

  • As already known, GGR fell 12%
  • What was not known was that VIP growth was -26%, a further deceleration from August’s -17% and -16% contraction for the prior three months.
  • Mass YoY growth only +15%, slightly above August’s increase of +14% and the third month of mid-teens Mass growth as compared to 1H 2014 growth of +36%.
  • Our Mass Decelerating theme (first espoused in June) of 2H 2014 is continuing and we expect additional mass deceleration during Q4 2014 and Q1 2015 – at a faster (slower growth) rate than even we thought.
  • VIP hold was close to normal for the market and slightly higher than last year
  • Rolling Chip volume declined 19% YoY – the second sequential month of such a decline and the worst performance since early 2009
  • Galaxy & MGM performed well while LVS was below trend.




  • Market share dropped to 21.8%, 110bps below the 6 month average driven by very high hold
  • VIP revenues declined nearly 14% YoY, while hold was higher than expected at almost 3.6% a 15 bps improvement YoY.
  • Disappointing GGR growth was driven by Rolling Chip volume that fell 39% YoY, worst in the market
  • Mass revenue grew 15%


  • Market share increased 20bps above the 6 month average due strong Mass revenues
  • Wynn’s VIP hold percentage fell about 60bps on a YoY basis but was respectable near 3.1%
  • GGR fell 16% YoY due to lower VIP hold but Mass revenue grew at 29%
  • Rolling Chip volume dropped 19% in line with the market


  • Galaxy’s GGR share was 22.8% an improvement of 190 bps from August and 240 bps above the 6 month average
  • Galaxy’s estimated VIP hold improved 35 bps YoY and was near 3.55% for September
  • YoY GGR growth of 9% led the market based on market leading VIP growth of 9% and Mass growth of only 10%
  • Galaxy remains our favorite stock in the group given its ability to drive VIP revenue growth amid a difficult environment and the likely earlier than expected opening of Phase II on Cotai.  We think Phase II could operate for 6-9 months as the only new property on Cotai


  • MPEL’s GGR share was 12.6% a decline of 30 bps over the 6 month average
  • GGR dropped more than 19% due in part to lower VIP hold and a nearly 35% decline in Rolling Chip volume
  • While below last year, MPEL’s September VIP hold was a slight below normal and down almost 50 bps on a YoY basis
  • Mass revenues declined 20%


  • MGM GGR share was 11.1% an increase of 180 bps over the 6 month average and 230 bps above July and August details
  • YoY GGR driven by high hold near 3.4% an increase of 70 bps YoY
  • Market leading Mass revenue growth was +36%
  • Rolling Chip volume declined 26%
  • Mass share was slightly better than the 6 month average

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more