Sterne Agee Points to "Strong" Macau Trends During Beginning of March
Sterne Agee's David Bain issued a note earlier highlighting gaming trends in Macau which are "off to a strong start" in March. The analyst said the run-rate through March 10th is up more than 30 percent from last year to 34.4 billion patacas .
Bain's favorite picks for the region are Melco Crown (NASDAQ: MPEL) and Las Vegas Sands (NYSE: LVS), both rated at Buy. Bain maintains Neutral ratings on both Wynn (NASDAQ: WYNN) and MGM (NYSE: MGM).
March Macau GGR trends off to strong start
According to our checks, Macau table-only gross gaming revenue (“GGR”) is MOP10.7b through March 10. Including slots, March’s full GGR run-rate is MOP34.4b or +~32% YoY. We are maintaining our +14% YoY estimate for March (MOP28.4b), and note our estimate calls for an all-time monthly record. Our top Macau casino operator pick remains MPEL, followed by LVS.
The March CY12 VIP hold rate was 2.98%, the second lowest hold rate for CY12. As such, we believe the first 10 days likely held a healthy hold comparison YoY. Still, early checked results are impressive, in our view. We continue to expect VIP outperformance relative to consensus estimates - especially early mid-year as comparisons ease significantly combined with continued follow through from an improving China macro picture.
Market Share. According to our checks, table-only market share through March 10 was: SJM at 28.4% (vs slot inclusive February share of 25.5%), Galaxy at 18.3% (vs 18.4%), LVS at 19.9% (vs 21.4%), MPEL at 13.9% (vs 12.8%), WYNN at 9.5% (vs 11.8%), and MGM at 10.0% (vs. 10.1%).
The comparisons for this year will be easy, with average gaming revenues during most of last year right around 25 billion MOP. If Macau can put up $30 to $32.5b MOP average over the next 6 to 9 months (20 to 30% increases) and LVS stands alone as the only concessionaire with a new facility in central cotai, then the company stands to increase it's gaming revenues by 25 to 45% on average.