20171101-招商证券_香港_-Macau_Gaming__Oct_GGR_strong_on_month-end_pick-up_6页_840kb

Macau Gaming Industry Report Summary

Core Content

This report provides an analysis of the Macau gaming sector performance in October 2017, along with projections for the full year and insights into the sector's valuation and investment ratings.

Key Figures and Trends

• October GGR Growth:

  • October 2017 GGR grew by 22.1% YoY to MOP26,633 million, slightly higher than September's 16.1% YoY growth.
  • Daily GGR was MOP859 million, up 20.7% MoM.
  • The VIP segment recorded a 30% YoY growth, while mass GGR grew 13% YoY.
  • The sector showed a sequential improvement in late October, likely driven by high-rollers' business following the 19th National Congress.

• Full-Year Projections:

  • We project 2017E GGR growth of 19% YoY (19% YTD).
  • November GGR is expected to grow by 18% YoY.
  • 4Q17E GGR growth is forecasted to be 20% YoY, up from 13% / 22% / 22% in 1Q/2Q/3Q17E.

• Sector Valuation:

  • The sector is currently trading at 24x FY18E P/E and 14x EV/EBITDA, which are in line with 5-year averages.
  • MLCO (Melco Resorts) is highlighted as the most attractive due to its potential upside in full-year GGR projection and undemanding valuation.

Investment Ratings

• Industry Rating: NEUTRAL

  • The sector is expected to perform in-line with the market over the next 12 months.

• Company Ratings:

  • BUY: Galaxy (27 HK), Wynn Macau (1128 HK), Sands China (1928 HK), Melco Resorts (MLCO US)
  • NEUTRAL: SJM (880 HK), MGM China (2282 HK), Melco Group (200 HK)

Financial Highlights

Sector Performance

• The sector showed recovery in late October, with GGR picking up.
• However, overall sentiment remains neutral due to concerns over slowing GGR growth.
• Melco Resorts is expected to outperform its peers, given its strong 3Q17E results and favorable valuation.

Investment Outlook

• The full-year GGR growth is projected to be 19% YoY, with VIP and premium mass segments contributing to the upside.
• Melco Resorts is considered the most attractive investment in the sector due to its potential for higher growth and undervaluation.
• The industry is trading at neutral levels, with no significant upside expected in the short term.

Additional Information

• Market Indices:

  • HSI: 28,246
  • HSCEI: 11,508

• Performance Metrics:

  • Absolute Return over 1m, 6m, 12m: -2.7%, +7.7%, +33.6%
  • Relative Return over 1m, 6m, 12m: -5.4%, -7.3%, +10.5%

• Valuation Metrics:

  • Simple Avg P/E (FY17E/FY18E): 26.9 / 24.6
  • Mkt Cap Avg P/E (FY17E/FY18E): 26.7 / 23.6
  • Simple Avg EV/EBITDA (FY17E/FY18E): 15.1 / 13.2
  • Mkt Cap Avg EV/EBITDA (FY17E/FY18E): 15.8 / 14.1

Figures and Charts

• Figure 1: Macau monthly GGR
• Figure 2: Macau daily GGR
• Figure 3: Peer valuation table (gaming licensees)
• Figure 4: Industry 1-year forward P/E
• Figure 5: Industry 1-year forward EV/EBITDA
• Figure 6-17: P/E and EV/EBITDA charts for individual companies

Disclaimer

This report is prepared by China Merchants Securities (HK) Co., Ltd. and is for informational purposes only. It is not an offer or solicitation to buy or sell any security. The information and opinions expressed are subject to change and should not be relied upon. Investors are advised to consult with financial advisors before making any investment decisions.