Golden Week follow-up was the weakest week in Macau in five years

With Studio City opening up this month, table allocation could soon be a concern for operators opening new resorts. Bernstein believes that stock selection remains critical when it comes to Macau.

After strong revenue numbers during most of this year’s Golden Week, gaming revenue in Macau dropped off last week to its lowest weekly level since 2010. In a new report, Bernstein analyst Vitaly Umansky broke down the numbers and explained what they mean for casino shareholders.

For the week ending October 18, average daily revenue (ADR) in Macau was only MOP 486 million, the lowest level since June 2010 and down more than 40 percent from the same week last year.

After a strong Golden Week showing, the latest numbers bring October’s total gross gaming revenue (GGR) up to MOP 12.5 billion.

“Assuming an ADR of MOP 490-600 million for the remainder of this month, October GGR would be MOP 18.9-20.3 billion, representing a y/y decline of -28 percent to -33 percent,” Umansky explained.

Among the four U.S.-listed Macau operators, Las Vegas Sands Corp. was the largest month-over-month market share gainer on the week, up 4.1 percent. MGM Resorts International and Wynn Resorts, Limited both suffered modest share loss.

The Macau government recently reiterated its intention to grow table allocation at a compound annual growth rate of no more than 3.0 percent from 2013 to 2022. Melco Crown Entertainment Ltd’s new Studio City resort opens later this month, and all of the other operators plan on opening new resorts as well in coming years.

It remains to be seen whether table allocation will become an issue when gaming space expands.
For now, Bernstein believes it’s a stock pickers game in Macau. The firm maintains Outperform ratings on its top two Macau picks: Melco Crown and Las Vegas Sands’ China unit.

Bernstein has Market Perform ratings on the China units of MGM and Wynn.