Wells Fargo Sees Worse-Than-Expected Macau Gaming Sales in July (LVS) (MGM) (WYNN)
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Rating Summary:
18 Buy, 7 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 12 | Down: 19 | New: 22
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Stocks in the Casino & Gaming sector are holding up relatively well Monday afternoon despite an earlier research note from Wells Fargo's Cameron McKnight which pointed at a continued slowdown in growth within the Macau market. While shares of Las Vegas Sands (NYSE: LVS) are down 0.2 percent at last check, shares of MGM (NYSE: MGM) and Wynn Resorts (Nasdaq: WYNN) are up 0.9 percent and 0.5 percent, respectively.
Based on the first 15 days of July, McKnight said gross gaming sales for the month are expected to be flat to up 5 percent on a year-over-year basis, below the Street's initial estimate of up about 7 percent. Revenue which averaged HK$739 million per day over the second week of July was 4 percent lower than the previous eight days and about 3 percent worse than the year-to-date average, according to McKnight.
Looking at specific companies, McKnight noted "LVS's current market share of 21% is up 300bps from June. While hold rates could be influencing results, we believe Sands Cotai Central's VIP junket rooms continue to ramp but estimate this business operates at a low gross margin of 10-12%."
The Wells Fargo analyst listed estimated monthly table game gross revenue market shares within Macau, as of July 15th: SJM - 25 percent, Sands - 21 percent, Galaxy - 20 percent, Melco Crown (Nasdaq: MPEL) - 15 percent, Wynn - 12 percent, and MGM - 8 percent.
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Based on the first 15 days of July, McKnight said gross gaming sales for the month are expected to be flat to up 5 percent on a year-over-year basis, below the Street's initial estimate of up about 7 percent. Revenue which averaged HK$739 million per day over the second week of July was 4 percent lower than the previous eight days and about 3 percent worse than the year-to-date average, according to McKnight.
Looking at specific companies, McKnight noted "LVS's current market share of 21% is up 300bps from June. While hold rates could be influencing results, we believe Sands Cotai Central's VIP junket rooms continue to ramp but estimate this business operates at a low gross margin of 10-12%."
The Wells Fargo analyst listed estimated monthly table game gross revenue market shares within Macau, as of July 15th: SJM - 25 percent, Sands - 21 percent, Galaxy - 20 percent, Melco Crown (Nasdaq: MPEL) - 15 percent, Wynn - 12 percent, and MGM - 8 percent.
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