Macau gaming:Oct-16GGR tracking at 6-12%y-y growth

October has been faring a tad better than expected thus far.

    Riding on the strong holiday demand during the October Golden Week,average daily gaming revenue (GGR), excluding slots, increased 53% w-wto HKD895mn over 1-10 October (Fig 1). Assuming average daily GGR (exslots)of HKD500-560mn for the remainder of the month (vs HKD544-563mnin Jul-16 to Sep-16) to reflect moderating gaming activity post the week-longholiday, it would imply Oct-16 GGR of HKD20.6-21.9bn (up 6-12% y-y, down15-23% m-m), a tad better than our original estimate of 3-10% y-y growth.

    Sector comment: The next few weeks will be key to watch as we monitorclosely on how the market fares in the off season period and whether thevisit of Premier Li (during Oct 10-12) will have any impact on the gamingmarket, especially VIP. We will also look forward to further updates on thequality of gaming revenue improvement as the gaming companies couldstart reporting their 3Q16 results from next week onwards. We remaincautious on the Macau stocks as we believe the recent gaming revenuegrowth improvement has already been priced in, with the sector trading atpeak-cycle valuation of 15x 2017F EV/EBITDA. Despite that, we still have aBuy rating on MGM China (2282 HK) for its attractive valuation.

    For further details, please refer to our reports: Anchor Report: Macaugaming - Lessons from Las Vegas (22 July 2016) and Macau gaming -EBITDA growth resumes, but mostly priced in (6 October 2016), and QuickNote - Macau Gaming - What to expect for October (3 October 2016).