THE BUZZ: Macau casinos to deliver a strong profit growth, JP Morgan says

2014-4-16

From：Macau Daily Times

Ahead of Macau‘s earnings season, J.P. Morgan conducted its first quarter preview and expects Macau companies to deliver a strong profit growth, to the tune of 31% from a year ago (or 4% from 4Q). Macau’s total gaming revenue grew 20% from a year ago.
Macau can deliver stronger profit growth because of the rising share of the mass segment, which carries a higher profit margin, analysts Cusson Leung and Daisy Lu wrote in a note cited by Barron’s yesterday.
“Robust mass growth and healthy VIP volume. Macau 1Q headline gaming revenue to increase 20% yoy or 2% qoq. By segment, mass market continues to lead the growth with 39% yoy or 5% qoq revenue increase while VIP revenue to register healthy 12% yoy, or flat qoq growth.”
They added, “Revenue mix to continue to improve with high margin mass segment accounting for 33% of gross gaming revenue (32% in 2Q or 28% in 3Q12).”
Overall, the sector’s EBITDA is estimated to grow 31% yoy or 4% qoq, outpacing the headline 20% yoy as high margin mass outperformed.
On the individual companies, Galaxy Entertainment and Sands China, a unit of Las Vegas Sands, are expected to outperform. Melco Crown,Wynn Macau, a unit of Wynn Resorts, and SJM will fall short of expectations, J.P. Morgan’s analysts said.

Copyright@Macau Daily Times