JPM Expects stronger 1st qrt growth for Galaxy & LVS than Melco & Wynn
On the individual companies, Galaxy Entertainment and Sands China, a unit of Las Vegas Sands, are expected to outperform. Melco Crown,Wynn Macau, a unit of Wynn Resorts, and SJM will fall short of expectations, J.P. Morgan’s analysts said.
From an article in Macau Daily Times 4/15
Ahead of Macau‘s earnings season, J.P. Morgan conducted its first quarter preview and expects Macau companies to deliver a strong profit growth, to the tune of 31% from a year ago (or 4% from 4Q). Macau’s total gaming revenue grew 20% from a year ago.....
They're entitled to their opinion. Here is Sterne Agee's.
1Q14 earnings preview
We raise our 1Q14E adj. EBITDA to $350.7m from $329.9m.
At City of Dreams (“COD”), the market leader in premium mass gaming, we project mass
table revenue will be +46% YoY versus Macau market checks of +39%. We also anticipate a
continued margin ramp at COD given its weighting to mass gaming. Mass gaming generally
carries margins three times higher than VIP and is growing nearly three times faster. As such,
we expect a favorable outlook for continued margin gains at COD.
During 1Q14, we believe MPEL continued to convert lower-margin VIP tables to highermargin
mass ones at COD, which was the primary reason MPEL’s VIP rolling chip turnover
growth lagged the market (according to checks), in our view.
tell em doc! We love Bain's "channel checks" -- the reality is that he just issued his most important piece ever in the gaming space. into the teeth of this braod market drop and slam on the gaming stocks, his "channel checks" means "based on available public information and our conversations with executive management." The VIP piece is right on... marginal tour operators are the ones without funding or floors/table allocations from the likes of MPEL -- as with WYNN, only the house select VIP tours are playing at these choice venues... they are simply booked out with more profitable premium mass and other direct connectivity.
So Bain has it right on MPEL, top to bottom. The Wells Fargo, JP Morgan and Deutsche bank analysts and their research directors signing off on their recently published "research" should all be out of work after the 1Q14 results and refreshed outlooks are shared. None of those three jokers have a direct relationship with exec management or a grip on what is happening.