Calling Macanese casino business in the first weeks of “largely as expected,” Jefferies Equity Research analyst Andrew Lee noted an upward trend in mass-market gambling. That was, however, offset by a decline in high-roller play.
According to Lee’s data, VIP action in Macau’s casinos was 2.5 percent off of last year’s pace and high-roller winnings were lower still, down by as much as 3.4 percent.
At the same time, mass-market wagering rose seven percent on average. The Chinese enclave saw $80.3 million won per day in early August, an improvement over July ($74.7 million won per day), further bolstered by two weekends.
Lee saw the Macau market trending toward $76.75 million and $80.7 million win per day for the remainder of August. He noted that this would be above both June’s and July’s averages, “demonstrating that results should remain in line with historical trends, as August is typically the strongest summer month.”
The analyst observed that Melco Resorts & Entertainment and SJM Holdings both had yet to report second-quarter earnings. “In our view, the focus will be on maintaining stable market share on an unusually heavy promotional environment and providing further color on the strength of the summer holidays,” Lee predicted.
Lee said he supported a conservative and selective approach to Macau-facing stocks, pointing to a more promotion-intensive business climate. He explained that remarks by executives of Wynn Resorts and Las Vegas Sands “suggest that promotional activity is higher than normal, which adds a negative element to an already slowly recovering market, should it persist.”
Turning to individual operators, Lee remarked that Galaxy Entertainment was focused on promoting its newest casinos, while Las Vegas Sands continued to shed market share. However, he continued to favor Galaxy, as well as MGM Resorts International, applauding its strategy in Macau.
The analyst concluded that Macanese casino stocks needed a positive catalyst. (Golden Week approaches in October.) In the meantime, “The current update is generally neutral for stocks.”
