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Takeaway: April details brings more bad news for Macau stocks


The April details brought showers and not flowers to the headline 39% GGR decline. The market played lucky over its customers which we estimate contributed 2-5% in YoY GGR growth. In other words, it should’ve been worse. Going forward, May should look better optically. Average daily revenues will climb sequentially, particularly during the first week due to the May holiday. On a YoY basis, the % decline should improve. However, that doesn’t mean the fundamentals are improving.

In retrospect, April was a worse month than March which was worse than February, etc. In fact, seasonally adjusted gaming volumes have deteriorated since June. Our focus has been on high margin base mass revenue which has been dropping for only a few months, but at a faster rate than the other segments. The Street hasn’t picked up on it since publicly available base mass data is scant. This is evident from their estimates which remain too high for 2015 and especially 2016, primarily as it relates to margins. We believe it is because their implicit base mass estimates are way too high. While maybe the best positioned Macau operator long term, LVS may have the most to lose over the near and intermediate term.

We will be hosting a call on Friday morning at 11am to discuss our Macau outlook and analysis and to provide an in-depth look into the trends between the Shanghai Stock market and Macau GGR.

Please see our detailed note: