Casino companies operating in Macau jumped in morning trading after Macau's gaming bureau said casino revenue in the Chinese territory rose 8.5% in November compared to the same month of last year, marking the 28th straight month of growth in the gambling hub. Publicly traded companies in the Macau gaming space include Las Vegas Sands (LVS), MGM Resorts (MGM), Wynn Resorts (WYNN) and Melco Resorts (MLCO).
GAMING DATA: Macau's Gaming Inspection and Coordination Bureau said gross revenue from games of fortune in the region rose 8.5% in November to 24.995B patacas from a year ago. This compares to a 2.6% gain in October vs. last year to 21.633B patacas. The latest monthly tally brings Macau's accumulated GGR year-to-date to 276.378B patacas.
WHAT'S NOTABLE: Though October was considered a peak month in Macau because of of the Golden Week holiday from October 1-7, Union Gaming analyst Grant Govertsen said October GGR was negatively impacted during the period surrounding President Xi Jinping's trip to the region to attend the opening of the Hong Kong-Zhuhai-Macau bridge. Even though October represented the 27th consecutive month of revenue growth in Macau, Macau has seen softening growth in gaming revenue since the second quarter, with VIP business being hit by weakening China property prices and turmoil in the stock market. Though November represents the 28th straight month of growth in Macau, it is the third consecutive month of single-digit growth.
ANALYST COMMENTARY: Deutsche Bank analyst Carlo Santarelli said he views November's GGR results as a "pleasant upside surprise," which should be well received on a standalone basis. Santarelli said that while it is believed higher VIP hold was a factor in the period, driving y/y VIP growth for the first time in a few months, he expects the November result to curb fears around a quick unraveling of the VIP market following the October Golden Week. Bernstein analyst Vitaly Umansky said that, assuming weekly channel checks during the month were accurate, results in the second half of November improved compared to the earlier part of the month. Morgan Stanley analyst Thomas Allen said a "constructive" outcome from the G20 meeting between U.S. President Donald Trump and China's President Xi Jinping should lead to a thawing of the trade tensions between the U.S. and China, thus alleviating some concerns around Macau concession renewals. Allen noted that all of the different concession scenarios would imply continued upside to Las Vegas Sands, MGM and Wynn if enacted, and added that Las Vegas Sands continues to be his preferred play on Macau.
PRICE ACTION: In morning trading, Las Vegas Sands was up 6.4%, while MGM gained 4.3%, Wynn Resorts climbed about 11% and Melco Resorts shares trading in New York jumped 8.2%.
