Global Gaming Macau Strong Out of the Gate; Singapore Muted; LV Still Weak

Near-Term Momentum in Macau to Continue — We recommend owning the Macau names into solid anticipated 1Q results, with continued momentum likely through the May Day Holiday and Galaxy Macau Grand Opening (scheduled for 15 May). With tight property transaction measures and policies to curb inflation in the Mainland, we anticipate capital outflows to continue to drive Macau GGR (tracking +43% YTD).

Raising Earnings Estimates — We have modestly raised our Macau earnings estimates for 2011/12 to reflect current GGR and market share trends. Our estimates still generally remain below consensus due primarily to our more conservative 25% YoY total market GGR growth estimate in 2011 (vs consensus closer to +30%).

Also read US Gaming Weekly Report 

Cotai Story Intact — We continue to believe that those operators on Cotai will be the real beneficiaries from improving infrastructure over the next few years. Further, with the new Galaxy property (adding 1,400 new rooms on 15 May, Phase 1) and the addition of new entertainment offerings (e.g. Cubic and House of Dancing Water at MPEL), traffic could continue to migrate from the Peninsula.

Singapore — Following the meteoric ramp-up in 2010 Singapore gaming revenue, we anticipate growth to slow to ~10% in FY11.

Positioning — Our top Macau picks include the Cotai operators, MPEL, SCL and Galaxy, but we believe there is visibility for strong near-term performance across the space. ASEAN growth remains more muted but, at current valuations, we believe Genting Bhd is a great way to play the pan-ASEAN theme (trading at ~12% discount to its interests in Genting Singapore and Genting Malaysia). We expect gaming trends in Vegas to remain lackluster for the foreseeable future (gaming revenue tracking down 6% YTD), although MGM has benefited recently from positive convention business.