Macau Gaming:Readjusting mass expectations

Mass segment growth slowed to 17% in July; slowdown was not broad-based。
Macau stocks are down 3-8% today amid market worries about mass table revenuegrowth of 17% YoY in July (lower than our 21-25% forecast, which was below thestreet’s). The slowdown in July was not broad-based—premium segment properties inthe peninsula (Wynn: +36%; MGM: +40%) saw very little slowdown, whereasproperties that are more focused on non-premium and casual gamblers (Venetian:+12%; Galaxy Macau: +16%) slowed substantially—which might partially be explainedby casual gamblers being more likely to bet on the world cup than hardcore table gameplayers. Still, it is virtually impossible to determine how much of the slowdown wasworld cup-related, and there is now a higher risk that mass demand is slowing morethan we expected (around 20% in H214E). Our estimate had already factored in severaldrags in H214 (which we believe the market has underestimated; please refer toprevious notes including Macau Gaming: July revenues remain subdued published on 1August 2014)
Are the medium-term drivers for the mass segment intact。
We remain comfortable with our mass segment growth forecasts of 17-18% for 2015-17 (however, we see risk in consensus’ 22-25% forecasts). Our forecasts imply singledigitgrowth in spending per visitor in 2015-17E, compared to an around 20% increasefor the industry in 2011-14E (Figure 2). We believe structural growth in the masssegment will continue to be supported by: 1) income growth among China’s middleclass; 2) the build-out of hotel rooms in Cotai, which adds capacity (Figure 3) to servethe "middle" mass segment, who are currently priced out of Macau; 3) infrastructureimprovements, including the Hong Kong-Zhuhai-Macau Bridge, which will becompleted in 2016; and 4) construction on Hengqin Island.
Re-adjustments to mass expectations could hamper near-term sentiment。
For the near term, we reiterate our view that consensus downgrades will drag sectorsentiment, and the market could take some time to adjust to lower medium-term massexpectations. The sector is trading at 13.5x 2015E PE, 11.8x 2015E EV/EBITDA and>5% 2015E dividend yield, with profit growth in the mid-teens. 正文已结束，您可以按alt+4进行评论