11 December 2017 Asia Pacific/Hong Kong Equity Research Casinos & Gaming Macau Gaming Sector Research Analysts SECTOR FORECAST Kenneth Fong 852 2101 6395
[email protected] Mass back in full force Lok Kan Chan 852 2101 6390
[email protected] Figure 1: Raising our GGR growth forecast New Estimates Previous Estimates MOP'mn 2017E 2018E 2019E 2017E 2018E 2019E VIP 130,084 166,529 199,458 127,366 148,262 165,911 YoY chg 27% 28% 20% 25% 16% 12% Mass 122,462 142,669 171,202 120,901 135,409 154,366 YoY chg 13% 17% 20% 12% 12% 14% Slot 15,039 17,596 20,235 14,281 15,709 16,966 YoY chg 19% 17% 15% 13% 10% 8% Total 267,585 326,794 390,895 262,548 299,379 337,242 YoY chg 20% 22% 20% 18% 14% 13% Source: Credit Suisse estimates ■ Keep your eyes on this structural growth story. Strong VIP growth stole the limelight when in fact the mass segment has been quietly reaccelerating into 4Q17E at an estimated +8% QoQ (fastest in recent years) or 14-15% YoY, despite tougher YoY comparison. In 2018, VIP should continue its momentum, but more important, we see significant upside coming from still- early-stage mass player development efforts through improved player analytics, which is further supported by the game-changing infrastructure upgrade (HZMB) and the introduction of supportive policy (GBA). ■ Our brand new angle. (1) Mass player development as a multi-year driver coming from the increase in player conversion from visitors (33% of Macau visitors are gamblers versus 73% in Las Vegas) to more casino membership sign-ups (only 34% of Macau gamblers are casino members who normally spend 2-3x than non-member), and better player analytics that allow casinos to formulate effective marketing to enhance players' yield (room to grow from the current 50% hotel comp rooms).