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We’ve had a long Macau call on since late September but we fear the end of that trade is near. October was certainly better than September (seasonally adjusted) but it did trail off after Golden Week. High hold benefited the market, otherwise the YoY decline would’ve had a 3 in front of it rather than the actual 28% drop. The incremental data points for Macau Studio City will likely be negative, casting doubt on ROIs of the new Cotai properties and whether new supply will drive incremental visitation/GGR growth. Looking at November, we think the month is off to a sluggish start and our GGR forecast for the month of a 31% decline is larger than October’s and worse than Street expectations of a mid-20s drop. Finally, our 2016 EBITDA estimates remain well below the Street. Keep a trade a trade has been our mantra on Macau for the past several weeks and it looks like a good time to book profits.

We will be hosting a Macau call on Friday Nov 6th at 11AM to present more analysis on the October numbers, our model projections and outlook, and a new research topic. Please contact your Hedgeye salesperson for more details.

 Please see our detailed note: