Made in China:Macau,Lift ests for Wynn Macau &Galaxy;Chinese Airlines;Samsonite,ZKSH

Macau - Summer rally into 2Q results; lift forecasts (Karen Tang)

    Macau stocks fell 5% over the past 2 weeks on concerns that the new facial recognition feature on ATMs would hurt GGR. After checking with junket operators and casino managers, we conclude that GGR weakness in the last week of June was only a temporary blip due to low VIP play during President Xi’s visit to HK. In fact, GGR/day already rebounded strongly last week. While we agree with consensus that GGR growth should decelerate in 2H, we think stocks have now priced in too sharp of a slowdown. Macau stocks are now pricing in GGR growth to slow sharply from 22% yoy in 2Q to 15% yoy in 3Q, while we think 3Q GGR growth should remain relatively strong at 18-20% yoy. We expect consensus upgrades after the 2Q results in late July-mid Aug. For 2Q, we expect Galaxy (Hold) to post sequential EBITDA growth while MGM China (Hold) to post the worst sequential EBITDA decline. In this 2nd phase of VIP resurgence, we lift ests the most for Wynn Macau (Buy) and Galaxy (Hold). (Karen Tang - 852 2203 6141)