• It's Coming...

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Gaming revenues tracked through April 19th of HK$8.1bn and other tidbits we picked up this week.

We think Macau gaming revenues were HK$8.1bn through April 19th which puts the full month on the pace of a little over HK$12bn.  On a year over year basis, Macau is looking at around a +50% month off of an easy -7% comp last year.  Total gaming revenue was up 66%, 73%, and 42% in January, February, and March, respectively.

April growth looks strong.  Foot traffic has been good.  One caveat is that we heard volumes at LVS were not as strong as win due to higher than normal hold percentages.  We are trying to get a feel for the luck factor at other properties.  Going forward, with a full Golden Week (9 days vs only 3-5 last year because of financial crisis) May should be another strong month.  Also, Wynn Encore opened this week which should boost volumes but potentially hurt same store results.

In conjunction with the Wynn Encore opening this week, the company announced the development of Wynn Cotai with an opening timeframe of early 2013.  The sense from people on the ground in Macau is that early 2013 might be a bit aggressive but Wynn may be trying to appease the government. 

Here are some initial thoughts on Wynn Encore:

  • Given the day of mourning in China they don’t expect PR to be as aggressive but volumes shouldn’t be impacted that much.
  • Claim that Encore isn’t assuming any dilution in win per table… taking some of Starworld’s VIP business – but it’s hard to know
  • Our guy thinks that win per table will be down though (although hold comps were easy last year). 
  • Margins should get thinner – since VIP will become a larger % of total profits at the property
  • Mass numbers should drop as a result of credit falling away for premium players – and a lot of Wynn’s Mass play is “premium mass.”  Unclear if the new offering will help them – a lot of that will be impacted by credit policy

Other tidings:

  • Grand Lisboa's head of table games and  VP casino manager are leaving and going to Galaxy Cotai.
  • No word on visa restrictions. There are talks of additional tightening on the mainland – but nothing has happened.