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.
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.
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.
March Vegas RevPAR and visitation data were just released this afternoon which follows the GGR report from yesterday. March Strip RevPAR declined 1.3% y/y, which is about what we expected. We think investors were braced for something similar after seeing LVS’s 1Q results. That is, LVS reported 1Q Strip RevPAR growth of 1.6% y/y, when Jan/Feb combined for the industry was up 8.0% y/y. March absolute RevPAR increased 8% m/m from February, which is normal seasonality excluding CON/AGG years, so we wouldn’t read into what might look like a bad headline number. Yesterday we learned Strip GGR declined 3.8% y/y, which was similar but slightly below our expectations.
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 12 of the 19 y/y indicators are better than the prior month versus 10 of 19 last month. The average lead time is four months, and the most recent monthly data points show 14 of 19 are higher on a m/4m basis. We chart all 19 of the indicators, and we show a summary table in Exhibit 2.
This is a deep dive report we write each quarter where we update our thesis with new charts and preview each company and update estimates into earnings. Since the Christmas Eve bottom the average of our coverage is up 32%. The absolute risk/reward now seems less compelling, but the S&P 500 is also up 22% since the bottom, and our coverage is higher beta and already meaningfully underperformed the market last year.
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