Macau Gaming:Too early to take profit; 1Q11 earnings preview

研究机构：摩根大通(亚太) 分析师： Kennet ... 撰写日期：2011年04月12日

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    Strong news flow ahead offers downside support: After the strongmonth-to-date stock run, we believe the sector will continue to find supportin: (1) abundant positive catalysts: a seasonally strong April/May,expected strong 1Q11 results to come out in May, Cotai project approvaland opening of mega casino resort; (2) fair valuation: 13x FY11E EBITDAand 21x FY11E P/E and; (3) still-conservative consensus earnings:consensus expects Macau revenue to grow by 25% in FY11, compared toour estimate of 35% and actual revenue of 43% in 1Q11.
    1Q11 earnings preview: We expect SJM to deliver the strongest q-qEBITDA growth of 10% on market share gain and margin improvement,followed by a 9% increase from Galaxy on better volume. Sands Chinashould show a 7% increase in EBITDA as the win rate and volume improveat its Plaza casino. For Wynn, we expect a sequential decline in EBITDA of7% mainly due to a more normalized luck factor than last quarter.
    Drivers ahead: News flow aside, fundamentally, upside surprise is likely tocome from 1) upward revision in EBITDA margin during the upcomingresult announcement (late April/early May) as we believe that the street hasyet to factor in improved operating leverage and strong high-margin massmarketperformance month to date; 2) expansion in EBITDA multiples asan ongoing factor as EBITDA growth brings about an even stronger earningsgrowth, lowering P/E, and driving EBITDA multiples to expand gradually;3) revisions in top-line growth: the consensus 25% top-line growthexpectation for 2011 is a higher starting point, so it may take a few monthsof strong revenue data to prompt analysts to further upgrade their top-lineestimates. We expect consensus top-line upgrades to come in June/July.