All six of the Macau gaming operators have now reported earnings following Galaxy’s report on Thursday (27-HK – Not Covered). In this week’s piece we look at 1) potential pressure on VIP junket commissions, as it appears Galaxy may have been more promotional in 1Q, 2) who gained share, and in what areas, 3) mass versus VIP performance and why mass is materially outperforming VIP, and 4) implied GGR in 2Q-4Q assuming normal seasonality versus our actual estimates. We discuss with six charts. Please click the link above for the full report.
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Each year around this time we dig through annual proxy statements to learn about changes in corporate governance and shareholder alignment, and we publish the results. Specifically, we study three broad categories: 1) CEO compensation, including how much and how it’s derived, 2) CEO equity ownership, and 3) board composition. We gave each company a qualitative score for each category and aggregated the results in Exhibit 1. Every company has areas of improvement, in our view, but HLT and WYND scored best based on our qualitative aggregation, followed by VAC, NCLH, and WH. All five are companies we think to be commercially aggressive and shareholder focused
This is a recurring piece we write monthly where we track several key monthly indicators, which have historically led Macau GGR growth. The data points for the most recent month show only 7 of the 19 y/y indicators are better than the prior month versus 12 of 19 last month, as our data points took a meaningful step backwards this month. We chart all 19 of the indicators, and we show a summary table in Exhibit 2.
In this week’s piece we discuss five ideas with five charts, including probably way-too-early hurricane forecasts for the upcoming Atlantic hurricane season as it relates to cruise lines; NCLH’s recent consistent beat and raise execution, and what that hasn’t meant for the equity multiple; why VAC’s planned analyst day later this Fall seems positive; RevPAR index gains for brands, who seemingly took RevPAR share from independents in 1Q, which we believe is positive for the long-term model; and softer Chinese credit data in April, and what that might mean for Macau GGR. Please click the link above for the full report.
WYNN reported 1Q earnings after the close and then hosted their call. 1Q property EBITDA was $495M ($465M hold-adjusted) vs. FactSet consensus of $499M and our $485M estimate. We thought results in both Vegas and Macau were soft, and WYNN described the current operating environment specifically for VIP and premium mass as “choppy.”
We downgrade shares of MLCO for four key reasons: 1) the stock has rallied meaningfully off its lows and the multiple has recovered to near historical levels, 2) prior consensus estimates seem aggressive to us, 3) the macro looks increasingly dicey with re-emerging trade war rhetoric and recent stimulus from China may be short lived per reports, 4) the Morpheus ramp is taking longer than we expected and today’s call didn’t have enough answers to give us confidence.
Last week was a busy week filled with cruise, gaming, and lodging earnings reports. In this week’s piece we highlight ten key themes with several charts. Please click the link above for the full report.
After the close CZR reported 1Q earnings and hosted their call. The quarter beat us and consensus, on what seemed like better managed expectations following misses in prior quarters. The call was constructive, we thought, with positive demand commentary and enough color to imply that consensus estimates for 2019 might be a little low. CZR’s new CEO gave a short prepared statement, but was not available for Q&A.
MGM reported 1Q after the close. Adjusted EBITDA was $740M versus consensus of $729M and our $724M. The consolidated number after items was better than expected driven by better Macau results and better regional U.S. results, but MGM also missed expectations in Vegas, which receives a disproportionate amount of attention.
Shares of MGM have underperformed peers in recent months and the stock seems out of favor. For our weekly charts we revisit a key part of our MGM thesis ahead of the their earnings report on Monday. Please click the link above for the full report.
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