Nomura Securities on Macau May MTD Gaming Revenues; Disappointing but Stable

May 29, 2012 8:58 AM EDT Send to a Friend
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Nomura Securities on Macau May MTD gaming revenues; disappointing but stable.

Analyst, Harry Curtis, said, "May MTD gaming revenues; disappointing but stable. The first 27 days of May gaming revenues imply ~MOP26b for the month, which would imply ~7% YOY growth. We characterize overall demand since the opening of Sands Cotai (SCC) as below expectations but stable. This result should not be unexpected as Sands Cotai’s VIP tables (~150 tables) will not be fully operational until the end of May. Market share data is essentially unchanged from prior week, which implies that SCC has yet to gain traction."

"As for the stocks, we think they are attractive at current levels, although investors remain cautious about a hard-landing in China (which Nomura’s China Economist is not expecting), as well as the decelerating growth in Macau’s VIP demand. The group outperformed last week as investors recognized this value. Meaningful upside though, will need to be driven by a reacceleration in the average daily revenue data."

"We continue to believe that Las Vegas Sands (NYSE: LVS), Wynn (Nasdaq: WYNN) and MGM (NYSE: MGM) should be bought given strong free cash flow yields (~8-10% FCF yield on our 2013 FCF estimates). In the coming 12 months, we think free cash flow should increase as demand growth in Macau outpaces supply growth by a wide margin. WYNN, LVS and MGM are currently trading between ~9x-11x our 2013 EBITDA estimates."


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