Vegas Strip fundamentals have been mixed YTD, though we still think better than the sentiment. We see potential for revenue reacceleration in 2020 due to several tailwinds, which we’ll discuss and quantify, and we’ll also discuss some potential risks.
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For our Weekly Sho we've recorded a 20-minute video with 36 slides highlighting our current views as we head into another earnings season. The cruise line section begins at 4:03, the lodging section begins at 9:00, and the gaming section begins at 15:40. Enjoy the rest of your weekend!
The analyst day was not webcasted, and we counted close to 100 people in attendance. We thought the event was upbeat, as to be expected for an analyst day, but the stock traded down we think mostly because the long-term Macau targets were below expectations. WYNN also did not provide an update on 2Q, and capital return commentary wasn’t as aggressive as some may have hoped
May Vegas Strip GGR was released this morning which showed a decline of -11% y/y – entirely driven by continued weak baccarat play – below our expectation of -5% y/y. Had the month played in line with normal hold the result would have been in line with our expectation. Strip RevPAR was released this afternoon which showed an increase of 7.3% y/y, above our expectation of flattish. For the entire 2Q we estimate CZR Vegas revenue to be flat y/y and MGM Vegas revenue to be down slightly y/y. MGM Vegas and total consensus EBITDA for 2Q still seems too high to us, and CZR Vegas and total consensus EBITDAR for 2Q generally seems OK to us.
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 10 of the 19 y/y indicators are better than the prior month versus 7 of 19 last month. We chart all 19 of the indicators, and we show a summary table in Exhibit 2.
Macau May GGR was released overnight (06/01/19) showing growth of 1.8% y/y, we think slightly below a consensus estimate of around ~3% growth. Visitation grew 37% y/y during the first three days of the Labor Day holiday, and two of those days fell in April of last year presumably adding more benefit to May this year. Therefore, earlier in the month we would have expected stronger GGR than today’s result. We think visitation for the entire month may have continued to grow double digits y/y, but that again didn’t translate into GGR growth we think partly because of continued VIP softness. Our gaming summary file with all historical data is updated and included in the model link.
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.
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.”
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.
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