20140416-DBS_Group-Macau_Sector_Macau_s_tourism_windfall_100页_3mb

报告摘要

China / Hong Kong Industry Focus - Macau Sector Summary

Core Content

This report provides an in-depth analysis of the Macau sector, focusing on the gaming industry and its spillover effects on supporting industries such as retail, F&B, telecom, and banking. It also highlights the development of Hengqin Island and its strategic importance to Macau's long-term growth. The analysis includes investment recommendations and valuations for key stocks in the sector.

Main Growth Engine: Gaming Industry

Industry Overview:
- The gaming industry is the main growth engine, contributing over 20% of direct employment, 50% of GDP, and over 80% of fiscal revenue.
- In 2013, the industry generated US$45bn in winnings (GGR), a 19% increase year-on-year.
- Expected 15% GGR growth and 20% EBITDA growth in 2014.
Market Structure:
- The Cotai cluster holds 51% of the total industry capacity.
- Sands China holds 33% of the market share with 9,277 hotel rooms.
- No new capacity will be added in 2014, except for Macau Legend's Harbourview Hotel with 445 rooms.
Investment Picks:
- Small- to mid-cap gaming stocks: Paradise (1180 HK), Macau Legend (1680 HK)
- Large-cap gaming stocks: Melco Crown (6883 HK), Sands China (1928 HK)
- Supporting industries: CITIC Telecom (1883 HK), Sa Sa (178 HK)
Valuation Highlights:
- Paradise (1180 HK): Target Price HK$9.80, Upside 54%, Recommendation: Buy
- Macau Legend (1680 HK): Target Price HK$9.00, Upside 39%, Recommendation: Buy
- Sands China (1928 HK): Target Price HK$68.90, Upside 10%, Recommendation: Buy
- Melco Crown (6883 HK): Target Price HK$131.30, Upside 38%, Recommendation: Buy

Supporting Industries

Retail:
- Macau retailers have high returns on store investment.
- Major players include Belle (1880 HK), Bonjour (653 HK), and Luk Fook (590 HK).
- Retail sales grew 23% y-o-y in 2013, with telecom equipment and jewellery & watches seeing significant growth.
- Giordano (709 HK) and jewellery retailers (Chow Sang Sang, Luk Fook, Chow Tai Fook) face short-term hurdles but have medium-term potential.
F&B:
- Food and beverage is a key component of visitor spending, with 70% of a typical visitor's expenditure.
- Future Bright (703 HK) is highlighted as a leading operator in this space.
- The company plans to open seven new restaurants in Zhuhai and Hengqin in 2014.
Telecom:
- The booming tourism industry is driving telecom growth.
- CITIC Telecom (1883 HK) is the top pick, with 70% of earnings from CTM, the leading mobile operator in Macau.
- Key risk is competition from the fixed-line market.
Banking & Finance:
- Macau's banking sector has seen 30% CAGR in loan growth from 2010 to 2013, driven by demand from China.
- NIM outlook is expected to improve with rising USD interest rates.
- Wing Hang Bank (302 HK) and Dah Sing Bank (2356 HK) have significant exposure to Macau.

Hengqin Island Development

Strategic Location: Hengqin Island is adjacent to Macau and is expected to become a feeder city to Cotai.
Development Zones:
- Northern: Focus on CBD and RMB settlement center, with estimated RMB100bn investment.
- Central: Education, creative & culture, R&D, medicine, and healthcare.
- Southern: Leisure and tourism, with Zhuhai Chimelong International Ocean Resort already operational.
Major Projects:
- Shun Tak (242 HK) is developing Nova Park on Taipa Island, with a total of 620 residential units.
- Future Bright (703 HK) is planning a plaza on Hengqin Island with up to 100 shops and restaurants.
- Macau Legend (1680 HK) is developing the Harbourview Hotel with a 33% discount compared to other Cotai operators.

Key Takeaways

Gaming is the core of Macau's economy, and its growth is expected to continue.
Supporting industries are also benefiting from the booming gaming sector.
Hengqin Island is a key development area with strategic importance for Macau's future.
Small- to mid-cap stocks offer better growth and return prospects compared to large-cap names.
Valuation remains a key factor, with PEG < 1 for some stocks indicating attractive value.

Investment Summary

Gaming Sector:
- Expected 15% GGR growth and 20% EBITDA growth.
- Focus on operating flexibility and hotel room inventories.
- Paradise and Macau Legend are recommended for their growth potential and relatively low valuations.
- Melco Crown and Sands China are preferred large-cap stocks for their market share and capacity.
Supporting Industries:
- Retail and F&B are expected to benefit from rising visitor numbers.
- CITIC Telecom and Sa Sa are highlighted for their growth and potential in the retail and telecom sectors.
Hengqin Island:
- A well-planned development with three regions and ten zones.
- Infrastructure projects will improve connectivity and support long-term growth.
- Shun Tak, Future Bright, and Macau Legend are key players in the development of Hengqin Island.
Market Outlook:
- The sector is currently overvalued, with high expectations on VIP resurgence and Cotai expansion.
- Earnings growth is expected to be modest, with mass market being more profitable than VIP.
- Stock selection is crucial, with smaller names offering better returns due to their undervalued status and growth potential.