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Macau Gaming Stock Estimates Revised Mostly Higher at Sterne Agee (MPEL) (LVS) (MGM) (WYNN)

July 8, 2013 8:42 AM EDT
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Price: $18.97 +0.42%

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Sterne Agee analyst David Bain adjusted estimates on Macau gaming stocks Monday, mostly upward revisions driven by high-margin mass growth.

"Based on Island data checks and other factors, our 2Q13 EBITDA forecasts for MPEL, LVS and MGM are now 20%/3%/2% above consensus, while WYNN is mostly in-line," the analyst comments. "High-margin mass gaming (~65%+ of Macau market EBITDA, +31% ytd growth) drives most upward revisions. Visa policy loosening, the Guangzhou/Zhuhai rail and an up to 40% augmentation to immigration capacity at the Gongbei checkpoint, should continue to fuel more and higher-quality mass patrons. MPEL remains our top pick, though we also favor LVS and MGM."

Estimate changes:
Melco Crown (NASDAQ: MPEL) (Buy, $34 PT). 2Q13 total adj EBITDA to $320.5m from $242.5m and vs. $266.7m consensus. CY13/CY14 EPS to $1.08/$1.21 from $0.89/$1.08. Most of our 2Q13 model revisions relate to upward mass revenue at City of Dreams ("COD"). We believe mass revenue at COD increased 9.8% versus our channel checked Macau market estimate for +3.2%. Adjusting for theoretical VIP hold rates, we believe 2Q13 EBITDA to be in the range of $285m to $290m (still 4% to 9% above consensus).

Las Vegas Sands (NYSE: LVS) (Buy, $63 PT). Macau 2Q13 EBITDA to $671.2m from $619.4m and vs $642.8m consensus. Full 2Q12 adj EBITDA to $1.114b vs. consensus of $1.084b. CY13/CY14 EPS to $2.81/$3.12 from $2.67/$2.93. Most of our 2Q13 Macau model revisions relate to upward mass revenue, which we believe increased 6.3% QoQ vs our channel checked Macau market estimate for +3.2%. We raise our 2Q13 Singapore EBITDA to $399.8m from $388.6m due to slightly higher mass assumptions (discussed on the following page).

Wynn (NASDAQ: WYNN) (Neutral, $132 PT). Macau 2Q13 EBITDA to $306.2m from $320.3m and vs. $311.8m consensus. Full 2Q12 adj EBITDA to $399.0m vs. consensus of $398.4m. CY13/CY14 EPS to $6.74/$6.76 from $6.84/$6.86. Our LV EBITDA of $112.3m remains, and is in-line with consensus. We believe mass revenue will be -9.2% QoQ, versus our Macau market estimate for +3.2%.

MGM (NYSE: MGM) (Buy, $19 PT). Macau 2Q13 EBITDA to $205.6m from $183.1m and vs. $187.7m consensus. Full 2Q12 adj EBITDA to $543.8m vs. consensus of $531.4m. CY13/CY14 EPS to $0.03/$0.14 from $(0.04) /$0.11. We believe Macau mass revenue will be +13.7 QoQ versus our market estimate for +3.2%. LV EBITDA to $306m from $301m and we believe our flow-through assumptions may prove conservative. We tweaked our regional EBITDA (Mississippi and MGM Grand Detroit) down modestly to better match regional gaming trends.

Bain also notes, while early in the month, July Macau table-only gross gaming revenue is MOP6.6b through the 7th. Including slots, the GGR run-rate for May is MOP30.1b or +~24% YoY. They continue to forecast July MOP to end at 29.2b, or +19% YoY.


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