Macau Gaming:Nov GGR strong on month-end pick-up

Quiet Golden Week, followed by high-end GGR recovery

    Oct GGR came to the higher end of market expectation of 13-17% YoYgrowth. We estimate Oct GGR in VIP segment to have grown 30% YoY, andmass GGR to record 13% YoY. Oct Golden Week was good but did not reachthe level to surprise the market. However, GGR started picking up in lateOctober after 19th National Congress was held; the sequential improvementin late October could have been mostly driven by high-rollers’ business.

    Full year GGR to grow 19% YoY

    We expect Nov GGR to record similar YoY growth of 18% YoY: mass is likelyto continue growing at a stable pace, while we think upside GGR projectionis coming from VIP and premium mass sides. We expect GGR YoY growthto be 20% in 4Q17E from 13%/22%/22% in 1Q/2Q/3Q17.

    Sector has seen recovery lately but no big upside

    The sector is currently trading at 24x FY18E P/E and 14x EV/EBITDA, in linewith their 5-year averages. There was some profit-taking in Oct due to themarket concern on slowing GGR growth. While sharp pick-up in late Oct hasprovided some recovery to the sector’s performance, we believe overallsentiment has stayed neutral by now. Among Macau names, we believeMelco Resorts is likely to outperform its peers, given desirable 3Q17E resultsand its undemanding valuation.