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Takeaway: Lucky LVS but market trends still negative

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LVS held at a higher VIP hold percentage in May than even April, itself a lucky month for the Sands properties.  For the first time in a long time, we’ll have to adjust our quarterly LVS estimate higher, although a volume related increase would’ve been preferred by the LVS bulls I’m sure.  Wynn and Galaxy, on the other hand, weren’t so lucky.

The average hold for the market was normal. Less than a week of Galaxy’s Phase 2 were in May’s numbers so June will be an important month in determining whether the market has grown or not as result of new supply. We suspect Phase 2 provided a little bit of a boost to the market.

While VIP volumes remain weak YoY, they seem to have stabilized sequentially to some extent. The same can be said about the overall mass revenues and the trade in Macau stocks looks higher over the very near term.  However, we continue to believe the high margin base mass segment is in worse shape than the Street expects and will pressure margins for the operators in 2015 and 2016.  Upcoming gains in Macau stock prices may be short lived as we anticipate another round of 2015 and 2016 estimate cuts.

Please see our detailed note: 

http://docs.hedgeye.com/HE_Macau_6.3.15.pdf

We will be hosting a call on Friday morning at 1pm to discuss our Macau outlook and analysis and to provide an in-depth look into EBITDA sensitivity by operator amid room and table supply increases. Please contact your Hedgeye salesperson for more details.