Macau: Golden Week VIP demand appears solid

Here is analyst Carlo Santarelli:

"While forward bookings generally mean little to nothing in Macau, we were surprised to hear that high-end demand appears solid for the upcoming Golden Week period. In an admittedly unusual twist, contacts expressed surprise that high-end players have actually called in advance for reservations, despite historically, just arriving with the expectation of service."

Macau names have been sold off since weaker-than-expected July gross gaming revenue came out. In the last three months, Las Vegas Sands fell 13.2%. Melco Crown dipped 13.2%. Wynn Resorts retreated 6.7%. MGM Resorts was down 2.7%. 

Among the Macau names, Wynn is Deutsche’s preferred stock. Santarelli explained why:

Net-net, we continue to see WYNN as the best way to express a somewhat contrarian positive view of Macau at present given its: 1) meaningful mass market outperformance relative to the market, 2) potential upside margin momentum stemming from mass growth in conjunction with VIP declines, 3) a lower, relative to peers, level of negative estimate revision risk, 4) continued high end strength in Las Vegas, some of which seems to be at the expense of Macau, and 5) a Cotai project which has shown little evidence it will miss management’s targeted opening dates.