Macau Gaming Sector SECTOR REVIEW. Source: DICJ, CEIC

Transcription

1 8 December 211 Asia Pacific/Hong Kong Equity Research Casinos & Gaming Research Analysts Gabriel Chan, CFA Isis Wong Macau Gaming Sector SECTOR REVIEW Growth is normalising, but not collapsing Figure 1: China s real interest rate versus Macau GGR growth (%) (%) Jul- Jul-6 Jul-7 Jul-8 Jul-9 Jul-1 Jul Real interest rate <reversed scale> (%) - LHS Macau GGR YoY % chg - RHS Source: DICJ, CEIC GGR growth is only normalising. The long-awaited gross gaming revenue (GGR) growth normalisation started in July, along with the peaking of negative real interest rates in China. Nevertheless, with the opening of Cotai Central in April 212, plus the strong balance sheets of casino operators giving them financial flexibility to inject working capital into the junket system to stimulate growth, we continue to stand by our 212 GGR projection, which implies 19% YoY growth. 2Q12 could be a turning point. While the ongoing growth normalisation may keep valuations low in the near term, we are expecting some meaningful earnings upgrades by the market once the GGR growth rate stabilises in 2Q12. On the other hand, any liquidity easing in China could stimulate growth again, particularly for the high-roller segment, and likely act as a significant sector-wide re-rating catalyst. We prefer Cotai operators. In our view, the near-term share-price performances of individual casino operators will be largely dependent on earnings surprises. We notice a continuous shift of market share from Macau Peninsula to Cotai, particularly in the mass-market segment. Based on such, our new pecking order is Sands China, MPEL, Galaxy (upgraded from Neutral to OUTPERFORM), MGM China, SJM (downgraded from Outperform to NEUTRAL) and Wynn Macau. DISCLOSURE APPENDIX CONTAINS ANALYST CERTIFICATIONS AND THE STATUS OF NON-US ANALYSTS. U.S. Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

2 8 December 211 Focus charts Figure 2: China's real interest rate versus Macau GGR growth (%) (%) Jul- Jul-6 Jul-7 Jul-8 Jul-9 Jul-1 Jul Real interest rate <reversed scale> (%) - LHS Macau GG R YoY % chg - RHS Source: DICJ, CEIC, Credit Suisse estimates Figure 4: Mass-market GGR/visitor trend Figure 3: China's real interest rate versus junkets rollingchip turnover growth (%) -4 (%) May-8 Nov-8 May-9 Nov-9 May-1 Nov-1 May Real interest rate (%) [reversed scale] - LHS YoY change in junkets' rolling-chip turnover - RHS Source: DICJ, CEIC, Credit Suisse estimates Figure : GGR forecast revision (MO P) 2, (%) 3 3 2, 2 1, 2 1, 1 1 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Jul-11 (US$ mn), 4, 4, 3, 3, 2, 2, 1, 1,, 211 previous +1.% 211 new 212 previous -.2% +1.2% 212 new 213 previous 213 new Mass-market GGR per visitor (MOP) YoY % chg Mass-market High-roller Slots Source: DICJ, CEIC, Credit Suisse estimates Source: Credit Suisse estimates Figure 6: Mass-market growth has been more stable (%) Figure 7: Combined market share in Cotai (%) Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 O ct A 28A 29A 21E 211E 212E 213E Mass-market GGR Jun ke ts' rollin g-chip turn over Combined market share in Cotai Source: DICJ, Credit Suisse estimates Source: DICJ, Credit Suisse estimates Macau Gaming Sector 2

3 8 December 211 Growth is normalising, but not collapsing Entering into the sub-4% growth era Macau s gross gaming revenue (GGR) started normalising and entered into the sub-4% growth era in October 211. In our view, the slowdown was largely due to a higher base YoY comparison. On the other hand, we observe that the growth trend of junkets rollingchip-turnover continues to show strong correlation with the real interest rate in China. With the real interest rate gradually turning less negative, and the increasingly tough YoY comparison, we expect the deceleration of high-roller GGR growth to continue. Actually, the normalisation trend had already started at the beginning of 211, and it was the opening of Galaxy s (27.HK, HK$1.2, OUTPERFORM [V], TP HK$18.8) Galaxy Macau in May 211, being a new attraction to the mass-market players, with additional hotel room supplies to fill up shortages, plus additional working capital that the casino operators provided to junkets, which re-accelerated GGR growth in June. 2Q12 could be the turning point Despite the normalising growth, we are actually not pessimistic. On the one hand, casinos are now armed with much stronger balance sheets, and thus will be able to pump working capital into the junket system to stimulate high-roller segment growth. On the other, the recent performance of the mass-market segment remains encouraging. With the opening of Sands China s (1928.HK, HK$23.2, OUTPERFORM [V], TP HK$28.6) Cotai Central in April 212, which will bring in 6, additional hotel rooms at lower rates once it is fully opened in 213, we expect the current visitation growth trend to be sustainable. We stand by our 212 GGR projection, which implies 19% YoY growth. In our view, consensus estimates are overly conservative, and we may see meaningful earnings upgrades post 4Q11 results and better-than-expected GGR growth after Sands China s Cotai Central opening. Furthermore, any form of liquidity easing in China could stimulate GGR growth, further triggering a sector-wide valuation re-rating. We prefer Cotai operators We notice a continuous shift of market share from Macau Peninsula to Cotai, particularly in the mass-market segment. Overall, casinos in Cotai altogether gained 1.8 p.p. in market share YTD to 3.%, owing to the opening of Galaxy s Galaxy Macau in May 211. We note that in October 211, Galaxy Macau captured a 1.% market share, implying other casinos in Cotai are not being hurt by the new opening. Looking ahead, we expect the rising trend to continue, with the addition of Sands China s Cotai Central. We project the combined market share of casinos in Cotai will advance to over 3% in 212. On the other hand, the mass-market market share shift from Macau Peninsula to Cotai has been even faster. As mass-market business has always been more resilient than the high-roller business, we recall that during the financial crisis period, the mass-market segment outperformed the high-roller segment and recorded no decline in GGR, while high-roller GGR fell as much as 17% at the worst time; casinos in Cotai should be less vulnerable to the potential slowdown in GGR growth as well. As such, casino operators in Cotai are likely to see relatively strong earnings growth potential, but exhibit relatively low earnings downside risks. Based on the above, our new pecking order is Sands China; MPEL (MPEL.OQ, US$9.7, OUTPERFORM [V], TP US$14.2); Galaxy (upgraded from Neutral to an OUTPERFORM); MGM China (2282.HK, HK$11.4, OUTPERFORM [V], TP HK$13.4); SJM (88.HK, HK$13.2, NEUTRAL [V], TP HK$14.6) (downgraded from Outperform to a NEUTRAL); and Wynn Macau (1128.HK, HK$2.7, NEUTRAL [V], TP HK$21.6). GGR growth has been normalising on the back of a tougher YoY comparison and China s real interest rate becoming less negative We believe consensus forecasts remain too conservative and meaningful earnings upgrades will happen in early 2Q12. Any form of liquidity easing could also trigger a sector-wide re-rating We prefer casino operators in Cotai on the back of their rising market share and stronger mass-market business Macau Gaming Sector 3

4 8 December 211 Valuation comparison and key info Figure 8: Valuation comparison Market Credit Pot. P/E EV/EBITDA FCF yield cap Price Suisse TP up/down (x) (x) (%) Company Ticker (US mn) (l.c.) rating (l.c.) (%) FY11 FY12 FY13 FY11 FY12 FY13 FY11 FY12 FY13 Galaxy 27.HK 8, OUTPERFORM MPEL MPEL.OQ, OUTPERFORM MGM China 2282.HK, OUTPERFORM Sands China 1928.HK 24, OUTPERFORM SJM 88.HK 9, NEUTRAL Wynn Macau 1128.HK 13, NEUTRAL Sector average Source: Company data, Credit Suisse estimates Figure 9: Summary of rating, target price and earnings forecast changes Target price EBITDA (local cur. mn) EPS (local cur.) Rating (local cur.) FY11 FY12 FY13 FY11 FY12 FY13 Company Ticker New Prev. New Prev. New Prev. New Prev. New Prev. New Prev. New Prev. New Prev. Galaxy 27.HK O N ,39,28 7,83 7,76 9,88 8, MPEL MPEL.OQ O R 14.2 n.a , MGM China 2282.HK O N ,639 4,74,37,623 6,21 6, Sands China 1928.HK O O ,1 1,468 1,83 1,823 2,72 2, SJM 88.HK N O ,16 7,3 7,96 7,97 9,24 9, Wynn Macau 1128.HK N N ,47 8,439 1,32 1,33 11,627 11, Source: Company data, Credit Suisse estimates Figure 1: Market share projection Overall GGR (%) 28A 29A 21A 211E 212E 213E Galaxy StarWorld City Club Galaxy Macau Sands China Sands Macao Venetian Macao Four Seasons Cotai Central MPEL Altira/Mocha City of Dreams MGM MGM Grand Macau SJM Grand Lisboa Oceanus Others Wynn Macau Wynn Macau Source: Company data, Credit Suisse estimates Macau Gaming Sector 4

5 8 December 211 Entering into sub-4% growth era Luck adjusted growth slowed to 32% YoY in October The Macau gaming sector recorded a 42.3% YoY increase in headline gross gaming revenue (GGR) to a record high of MOP26.9 bn (or US$3.3 bn) in October. However, the sector experienced above-average higher-roller win percentage, and on a luck-adjusted basis, GGR growth slowed to 32% YoY only. Looking at the details, mass-market GGR growth remained strong at 36.8% YoY while, junkets rolling-chip turnover increased only 3% YoY to a record high of MOP98 bn (US$77 bn). And going into November, GGR growth slowed further to 32.9% YoY, which confirmed the on-going growth normalisation. In our view, the slowdown was largely due to a higher base YoY comparison. GGR growth hovered at around 4% in August and September 21, and shot up to % in October 21. With such a higher base effect, we have entered into the sub-4% growth era. The following chart shows the luck-adjusted growth trend. Luck-adjusted GGR already grew less than 4% in October as a tougher YoY comparison kicked in Figure 11: Luck-adjusted GGR growth (%) 8 6 Galaxy Macau opening 4 2 Growth stimulated by increasingly negative real interest rate in China Growth rate normalizing Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11-2 Luck-adjusted GGR YoY growth (%) Source: Company data, Credit Suisse estimates Actually, the normalisation trend already started at the beginning of 211, and in our view, it was the opening of Galaxy s Galaxy Macau in May 211, being a new attraction to the mass-market players with additional hotel room supplies to fill up shortages, plus additional working capital that the casino operators provided to junkets, which re-accelerated GGR growth in June. Deceleration coincides with real interest rate normalisation We note that the growth trend of junkets rolling-chip-turnover continues to show strong correlation with the real interest rate in China. In our view, the negative interest rate environment and limited investment opportunities in China are driving liquidity outflow to see higher return overseas, with the Macau gaming market, through the junket system, being used as a window. With the real interest rate gradually turning less negative, and the increasingly tough YoY comparison, we expect the deceleration of high-roller GGR growth to continue. The opening of Galaxy Macau delayed the normalisation process Real interest rate changes show high correlation to GGR growth rate Macau Gaming Sector

6 8 December 211 Figure 12: China's real interest rate versus junkets rolling-chip turnover growth (%) (%) May-8 Nov-8 May-9 Nov-9 May-1 Nov-1 May Real interest rate (%) [reversed scale] - LHS YoY change in junkets' rolling-chip turnover - RHS Source: DICJ, CEIC, Credit Suisse estimates Figure 13: China s real interest rate versus GGR growth (%) (%) Jul- Jul-6 Jul-7 Jul-8 Jul-9 Jul-1 Jul Real interest rate <reversed scale> (%) - LHS Macau GGR YoY % chg - RHS Source: DICJ, CEIC, Credit Suisse estimates While inflation seems to have peaked, our economist expects it will stay at a relatively high level in the near-to-medium term. On the other hand, real interest rate may turn even more negative again if China starts to cut rates, which could be a significant stimulus to the consumption spending, including casino gaming in Macau. Macau gaming stocks typically react positively to China s liquidity easing measures. Share prices were up 6-1% on 1 December on the back of China s bp reduction in required reserve ratio (RRR). What are the differences between now and 28-9? Many investors asked about the junket liquidity issue, in light of the informal lending situation in China. In our view, junkets have no direct connection to the informal lending market. After all, what junkets need is HKD working capital in Macau, with which they buy chips from casinos, as casinos only accept HKD/USD, and not RMB. However, there would be some indirect connections. If some higher-rollers are involved in the informal lending market, no matter on the borrowing or lending side, they would suffer. Watch out for any interest rate cut in China, which would trigger a sector-wide re-rating Junkets are not involved in the informal lending market in China Macau Gaming Sector 6

7 8 December 211 Then, we may see them visiting Macau less frequently and/or requesting longer debt repayment periods, thus affecting liquidity in Macau. The strong balance sheets and cash flows make a great difference But there is one big difference between now and 28-9, which is the balance sheet of the casinos. In 28-9, casinos were engaged in a price war on junket commission rates (thus low profitability) as they were all constructing new properties, and thus, cash flows were very weak. Currently, except Sands China, all of them are generating positive free cash flow, with SJM, MGM China and Wynn Macau being in net cash position and are likely to pay dividends. Figure 14: Net debt/ (cash) trend of Macau casino operators Net debt/(cash) (US$ mn) E 212E 213E Galaxy , MPEL 29 1,234 1, MGM China ,24 Sands China 3,11 1,894 1, , SJM ,392-2,43-3,173-4,1 Wynn Macau ,979-2,33 Source: Company data, Credit Suisse estimates Thus, they would be able to pump working capital into the junket system to stimulate growth. Recall in May, overall GGR growth accelerated because Galaxy s Galaxy Macau opened and it offered additional working capital to junkets. Now Sands China is expected to open Four Seasons VIP rooms in November and Cotai Central in April 212, and it is likely that it would pump in additional working capital. All operators, except Sands China, are generating positive free cash flow and they are ready to pump in working capital to the junket system Figure 1: Free cash flow trends of Macau casino operators Free cash flow (US$ mn) E 212E 213E Galaxy ,96 MPEL -1,6-1, MGM China Sands China ,142 1,989 SJM ,37 1,44 1,31 Wynn Macau ,119 1,274 1,66 Source: Company data, Credit Suisse estimates Figure 16: Luck-adjusted GGR YoY growth trend (%) 8 7 Galaxy Macau opened Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Source: DICJ, Credit Suisse estimates Macau Gaming Sector 7

8 8 December 211 Growth normalisation to continue, but not collapse While we do not want to sound too positive, as we also believe the existing growth rate will slow, the slowdown is more likely to be a normalisation, rather than a sharp turn into negative growth. No cash flow concerns, no margin pressure As stated above, Macau casinos operators are not facing any cash flow issues. And they also do not have much margin pressure, with no input cost, no rental cost and labour cost accounting for less than 6% of operating costs. Therefore, even in a slower-growing environment, we still expect decent earnings performance. Supply growth is limited Moreover, we have limited supply growth in the pipeline with Sands China s Cotai Central to be the only new opening in the pipeline until 21, at the earliest. As such, industry dynamics still look favourable even in a slower-growth environment. Casinos in Macau have no input cost or rental hike pressure Sands China to be the only new opening from now till 21 at the earliest Macau Gaming Sector 8

9 8 December 211 2Q12 could be the turning point Mass-market segment continues to show encouraging signs Despite the normalising growth, we are actually not pessimistic. While the growth rate of the high-roller segment should remain more volatile and sensitive to the liquidity situation, the recent performance of the mass-market remains encouraging. While some would argue that growth in the high-roller segment is somehow stimulated by money transfer demand, the mass-market is about players bringing cash over to Macau to gamble, which should represent the true demand for gaming. Mass-market GGR growth remains stable and strong Figure 17: Mass-market GGR growth has been strong and stable (%) Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Mass-market GGR Junkets' rolling-chip turnover Source: DICJ, Credit Suisse estimates Mass-market GGR growth has been stable at around 3-4% YoY since mid-211, and the growth has been supported by consistent increase in tourist visitations and gaming spending per visitor. Figure 18: Macau visitation trend (' persons) (%) 3, 4 Figure 19: Mass-market GGR per capita trend (MOP) (%) 2, 3 2, 2, 1, 1, , 1, 1, Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Jul-11-3 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Jul-11 Visitation (' persons) YoY % chg Mass-market GGR per visitor (MOP) YoY % chg Source: CEIC, Credit Suisse estimates Source: DICJ, CEIC, Credit Suisse estimates Macau Gaming Sector 9

10 8 December 211 With the opening of Sands China s Cotai Central in April 212, which is expected to offer 6, additional hotel rooms at lower rates once it is fully opened in 213, we expect the current visitation growth trend should be sustainable. Note that the hotel occupancy rate in Macau remains high at over 8%, despite the addition of Galaxy Macau (1,9 hotel rooms) and a significant increase in hotel room rates suggest supply shortage of hotel rooms. We project a 19% YoY GGR growth in 212 Once again, when we review our 211 GGR growth projection, we found ourselves being too conservative. We have thus revised up our FY11 GGR projection by 1% to US$33.6 bn. Looking ahead, our 212 GGR project stays largely the same at US$4 bn, with the stronger mass-market GGR growth offsetting a more conservative high-roller GGR growth projection. Our forecast implies overall GGR growth of 19% YoY. We stand by our original GGR forecast Figure 2: GGR forecast revisions (US$ mn), 4, 4, 3, +1.% -.2% +1.2% 3, 2, 2, 1, 1,, 211 previous 211 new 212 previous 212 new 213 previous 213 new Mass-market High-roller Slots Source: Credit Suisse estimates Figure 21: GGR growth projections Mass- YoY chg. High- YoY chg. YoY chg. YoY chg. (US$ mn) market (%) roller (%) Slots (%) Total (%) 28 3, , , , , , , , , , E 7, , , , E 9, , , , E 11, , 1. 2, , Source: Company data, Credit Suisse estimates And due to our GGR revision, as well as changes in our market-share projection, we have also revised our FY11-13 earnings forecast of the six casino operators accordingly. Macau Gaming Sector 1

11 8 December 211 Figure 22: Summary of earnings changes EBITDA (Local cur. mn) EPS (Local cur.) FY11E FY12E FY13E FY11E FY12E FY13E Company Ticker New Prev. New Prev. New Prev. New Prev. New Prev. New Prev. Galaxy 27.HK,39,28 7,83 7,76 9,88 8, MPEL MPEL.OQ , MGM China 2282.HK 4,639 4,74,37,623 6,21 6, Sands China 1928.HK 1,1 1,468 1,83 1,823 2,72 2, SJM 88.HK 7,16 7,3 7,96 7,97 9,24 9, Wynn Macau 1128.HK 8,47 8,439 1,32 1,33 11,627 11, Source: Company data, Credit Suisse estimates Earnings upgrades in 2Q12? Share price performance likely to remain volatile in the near term With the gaming sector being perceived as a high-beta and sentiment-driven one, we believe the on-going growth normalisation will keep valuations low in the near term. On the other hand, share price performances are likely to remain sensitive to monthly GGR figures and macro news flow, until gross gaming revenue (GGR) growth rates normalise. In our view, the turning point is likely to happen in 2Q12, driven by meaningful earnings upgrade post 4Q11 results and perhaps better-than-expected GGR growth post Sands China s Cotai Central opening in April 212. We discuss this in further detail in later sections. Consensus estimates remain conservative Continuous earnings upgrades have been the key driving force behind the sector s robust share-price performance in the majority of 211. The trend started to reverse in mid- November, as we observed some earnings downgrades. We have seen some analysts revising down their 212 GGR growth projection to as low as 1%, which in our view, is overly conservative and sensational. With GGR growth remaining relatively high at 33% in November, and likely to stay above 2% in 1H12 on the back of Sands China s Cotai Central opening, and stabilisation of real interest rate in China, we believe some analysts will be forced to revise up their GGR growth and earnings projections once again, which is likely to happen in 2Q12. Figure 23: I/B/E/S consensus EBITDA projections Consensus cut in 212 growth projection is overly conservative, in our view Meaningful earnings upgrade may come in early 2Q12E (HK$ mn),, 4, 4, 3, 3, 2, Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 FY11 FY12 Source: I/B/E/S Macau Gaming Sector 11

12 8 December 211 Note our EBITDA forecasts are consistently above I/B/E/S consensus estimates. Figure 24: Credit Suisse versus I/B/E/S consensus EBITDA estimates EBITDA - CS EBITDA - I/B/E/S EBITDA - CS vs I/B/E/S (l.c. mn) (l.c. mn) (%) Company Ticker FY11E FY12E FY13E FY11E FY12E FY13E FY11E FY12E FY13E Galaxy 27.HK,39 7,83 9,88 4,964 7,11 8, MPEL MPEL.OQ , MGM China 2282.HK 4,639,37 6,21 4,829,23,93 (3.92) Sands China 1928.HK 1,1 1,83 2,72 1,23 1,999 2,8 (1.4) (8.4) 4. SJM 88.HK 7,16 7,96 9,24 7,8 7,722 8, Wynn Macau 1128.HK 8,47 1,32 11,627 7,972 8,917 1, Source: Company data, Credit Suisse estimates Valuations are attractive During a time of so much macro uncertainty, we believe that sectors with relatively stronger earnings growth potential deserve a valuation premium. However, the Macau gaming sector is still trading at relatively low valuations of 16.x FY12E P/E and 1.1x FY12E EV/EBITDA (14.3x FY12 P/E and 9.8x FY12 EV/EBITDA based on I/B/E/S consensus estimates). If we exclude Sands China, where valuations could be impacted by its new opening in 212 with only a partial contribution during the financial year, the sector market-cap weighted average valuations will be lower at 11.6x FY12E P/E or 7.8x FY12E EV/EBITDA. Figure 2: I/B/E/S sector FY12E EV/EBITDA (x) Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Figure 26: I/B/E/S sector FY12E P/E (x) Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 FY11 EV/EBITDA FY12 EV/EBITDA FY11 P/E FY12 P/E Source: I/B/E/S Source: I/B/E/S Macau Gaming Sector 12

13 8 December 211 We prefer Cotai operators Market share continues to shift to Cotai We notice a continuous shift of market share from Macau Peninsula to Cotai, particularly in the mass-market segment. Overall, casinos in Cotai altogether gained a 1.8 p.p. market share YTD to 3.%, thanks to the opening of Galaxy s Galaxy Macau in May 211. Note that in October 211, Galaxy Macau captured a 1.% market share, implying that other casinos in Cotai are not being negatively affected by the new opening. Cotai to continue to gain market share Figure 27: Combined market share of casinos in Cotai (%) Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Jul-11 Mass-market High-roller Overall Source: DICJ Looking ahead, we expect the rising trend to continue, with the addition of Sands China s Cotai Central. We project the combined market share of casinos in Cotai will advance to over 3% in 212. Figure 28: Combined market share of casinos in Cotai (%) A 28A 29A 21E 211E 212E 213E Combined market share in Cotai Source: DICJ, Credit Suisse estimates Macau Gaming Sector 13

14 8 December 211 Mass-market should be relatively more stable On the other hand, the mass-market market share shift from Macau Peninsula to Cotai has been even faster. As mass-market business has always been more resilient then the high-roller business, we recall that during the financial crisis period, mass-market outperformed the high-roller segment and recorded no decline in GGR, while the highroller GGR fell as much as 17% at the worst time; casinos in Cotai should therefore be less vulnerable to the potential slowdown in GGR growth as well. Casinos in Cotai are particular strong in the mass-market segment Figure 29: Percentage of GGR from mass-market segment (slot machines included) (%) Industry average E 212E 213E City of Dreams Cotai Central Galaxy Macau The Plaza Venetian Macao Source: DICJ, Credit Suisse estimates Based on the above, casino operators in Cotai are likely to see relatively strong earnings growth potential, but exhibit less earnings downside risks. In our view, the sector-wide share price rebound is almost done. With no significant re-rating catalyst in the near term, share price performances of individual casino operators will be largely dependent on earnings surprises. That said, casino operators in Cotai are preferred. Our preference: Sands China, MPEL and Galaxy Based on the analysis above, we recommend investors focus on casino operators in Cotai, namely Sands China, MPEL and Galaxy. Among the three, we rate Sands China as our top-pick as: (1) it has the only casino opening in ; (2) it has the highest revenue split from the mass-market segment; (3) it has the highest revenue split from Cotai. Between MPEL and Galaxy, we prefer MPEL, on the back of its recent share-price underperformance. In our view, the announcement of its Hong Kong dual listing had been an overhang on the stock as some investors believed there could be a potential new equity issue, and thus potential share dilution, as well as raising concerns about the company s cash flow. However, the company has taken the option of listing by introduction with no new share issues. In our view, the removal of the overhang, plus the expanded investor base should help MPEL catch up with the sector revaluation: note the stock is trading at a 34% discount to peers FY12E EV/EBITDA. We have upgraded Galaxy from Neutral to an OUTPERFORM, on the back of its strong market share momentum, which has been consistently exceeding our expectations. What has surprised us most was the fact that there is no cannibalisation between Galaxy Macau and StarWorld, which is enjoying as much market share as before Galaxy Macau was opened. Sands China is our top-pick on the back of its new opening and being most mass-market focused We think MPEL should get re-rating post its Hong Kong dual listing Galaxy s market share gain has consistently beat our expectations Macau Gaming Sector 14

15 8 December 211 We continue to like MGM China as a long-term play on the back of its attractive valuation, being the lowest among peers at 33% discount against industry average FY12E EV/EBITDA. In our view, with limited supply growth, utilisation of gaming tables across different casinos should eventually converge (after all, they are providing generic products as win percentages are the same across different casinos), and so will their valuations. We believe the potential declaration of a dividend in February 212 will be a re-rating catalyst. We downgraded SJM from Outperform to a NEUTRAL on the back of its consistent market share loss, which we believe will linger on in 212. Without an imminent re-rating catalyst, we believe that SJM s share price is unlikely to outperform its peers. And finally for Wynn Macau, we continue to find its premium valuation unattractive. Its present superb gaming table utilisation suggests that the potential for improvement is limited. Thus our pecking order: Sands China, MPEL, Galaxy, MGM China, SJM and Wynn Macau. MGM China s valuation discount is too deep to ignore, we think SJM s market share erosion may linger on Wynn Macau s valuation premium makes it unattractive Figure 3: Summary of changes in ratings, target prices and earnings forecasts Target price EBITDA (local cur. mn) EPS (Local cur.) Rating (local cur.) FY11E FY12E FY13E FY11E FY12E FY13E Company Ticker New Prev. New Prev. New Prev. New Prev. New Prev. New Prev. New Prev. New Prev. Galaxy 27.HK O N ,39,28 7,83 7,76 9,88 8, MPEL MPEL.OQ O R 14.2 n.a , MGM China 2282.HK O N ,639 4,74,37,623 6,21 6, Sands China 1928.HK O O ,1 1,468 1,83 1,823 2,72 2, SJM 88.HK N O ,16 7,3 7,96 7,97 9,24 9, Wynn Macau 1128.HK N N ,47 8,439 1,32 1,33 11,627 11, Source: Company data, Credit Suisse estimates Figure 31: Valuation summary Market Credit Pot. P/E EV/EBITDA FCF yield cap Price Suisse TP up/down (x) (x) (%) Company Ticker (US$ mn) (l.c.) rating (l.c.) (%) 11E 12E 13E 11E 12E 13E 11E 12E 13E Galaxy 27.HK 8, O MPEL MPEL.OQ, O MGM China 2282.HK, O Sands China 1928.HK 24, O SJM 88.HK 9, N Wynn Macau 1128.HK 13, N Sector avg Source: Company data, Credit Suisse estimates Macau Gaming Sector 1

16 8 December 211 Asia Pacific / Hong Kong Casinos & Gaming Rating (from Neutral) OUTPERFORM* [V] Price (7 Dec 11, HK$) 1.2 Target price (HK$) (from 17.38) 18.8¹ Chg to TP (%) 21.1 Market cap. (HK$ mn) 64,784 Enterprise value (HK$ mn) 72,971 Number of shares (mn) 4, Free float (%) week price range *Stock ratings are relative to the relevant country benchmark. ¹Target price is for 12 months. [V] = Stock considered volatile (see Disclosure Appendix). Research Analysts Gabriel Chan, CFA gabriel.chan@credit-suisse.com Galaxy Entertainment Group Ltd (27.HK / 27 HK) Momentum continues to exceed expectations Galaxy Macau continues to gain momentum, but no cannibalisation against StarWorld. Galaxy s overall market share gain has consistently beaten our expectation. Galaxy Macau extended its market share again in October to 1.%, while StarWorld enjoyed a 9.3% market share in the same month, which was as high as before Galaxy Macau opened. Looking ahead, we believe Galaxy Macau will benefit from the opening of Sands China s Cotai Central, while StarWorld s market share may retreat along with other casinos in the Macau peninsula. We prefer Cotai operators. With the opening of Sands China s Cotai Central in April 212, we expect casinos in Cotai, including Galaxy Macau, to continue benefiting from the overall market share shift from the Macau peninsula to Cotai. Potential dividend in 212/13? With only about HK$11 bn of total debt and HK$7 bn of cash on hand as of the end of 3Q FY3/11, and its strong operating cash flow which we estimate at about HK$7 bn in FY12E, we expect Galaxy to turn into positive net cash position in early 213. As the capex cycle is almost completed, we believe Galaxy may start to pay dividends in 212/13. Upgrade to OUTPERFORM. We have upgraded Galaxy from Neutral to OUTPERFORM on the back of its strong market share momentum. We finetune our FY11 earnings projection and revise up our FY12-13 EPS forecast by.-7.8%. We raise our target price to HK$18.8 (21.1% potential upside), which is based on 1x FY12E EV/EBITDA. Share price performance Price (LHS) Rebased Rel (RHS) Dec-9 Apr-1 Aug-1 Dec-1 Apr-11 Aug The price relative chart measures performance against the HANG SENG INDEX which closed at on 7/12/11 On 7/12/11 the spot exchange rate was HK$7.77/US$1 Performance over 1M 3M 12M Absolute (%) Relative (%) Financial and valuation metrics Year 12/1A 12/11E 12/12E 12/13E Revenue (HK$ mn) 19, ,67.4 3,7. 61,693.2 EBITDA (HK$ mn) 2,7.3,38.6 7,82.7 9,87.9 EBIT (HK$ mn) 1, ,64. 6,64.4 8,12.3 Net income (HK$ mn) , , ,731. EPS (CS adj.) (HK$) Change from previous EPS (%) n.a Consensus EPS (HK$) n.a EPS growth (%) P/E (x) Dividend yield (%) EV/EBITDA (x) P/B (x) ROE (%) Net debt/equity (%) net cash Source: Company data, Thomson Reuters, Credit Suisse estimates Macau Gaming Sector 16

17 8 December 211 Galaxy Entertainment Group Ltd 27.HK / 27 HK Price (7 Dec 11): HK$1.2, Rating:: OUTPERFORM, Target Price: HK$18.8, Analyst: Gabriel Chan Target price scenario Scenario TP %Up/Dwn Assumptions Upside Central Case Downside Income statement (HK$ mn) 12/1A 12/11E 12/12E 12/13E Total revenue 19,262 39,67 3,7 61,693 Cost of Goods Sold 16, 3,841 41,43 47,93 SG&A (excluding R&D) 1,272 4,234,78,923 R&D costs Other operating exp./(inc.) (21) (938) (1,196) (1,271) EBITDA 2,7,39 7,83 9,88 Depr & amort (excl. goodwill) Goodwill impairment EBIT 1,497 4,64 6,64 8,12 Net interest expense/(inc.) Non-operating inc./(exp.) (634) (1,16) () Associates/JV Recurring PBT 99 3,21 6,364 7,979 Exceptionals/extraordinaries Taxes Profit after tax 91 3,17 6,2 7,779 Other after tax income Minority interests Preferred dividends Reported net income 898 3,138 6,167 7,731 Analyst after tax adjustment Net income (Credit Suisse) 898 3,138 6,167 7,731 Cash flow (HK$ mn) 12/1A 12/11E 12/12E 12/13E EBIT 1,497 4,64 6,64 8,12 Cash taxes paid (36.1) (7.4) (81.3) (19.1) Change in working capital 1, Other cash & non-cash items (168.) (69.2) Cash flow from operations 2,461 4,883 7,26 9,421 Capex (,4) (7,142) (83) (92) Disposal of PPE Free cash flow to the firm (3,8) (2,28) 6,47 8,49 Acquisitions Divestments Other investment/(outflows) Cash flow from investments (,4) (7,142) (83) (92) Net shares issued/(repurchased) 1.3 Dividends paid Change in debt 3,989 3, Other financing cash flows Cash flow from financing 3,991 3, Effect of exchange rates.9 Movements in cash/equivs ,47 8,49 Balance sheet (HK$ mn) 12/1A 12/11E 12/12E 12/13E Cash and cash equivalents 4,428,17 11,627 2,123 Accounts receivable 83 1,87 2,14 2,468 Inventory Other current assets Total current assets,36 7,23 14,31 23,19 Total fixed assets 12,394 18,744 18,724 18,793 Intangible assets and goodwill 1,32 1,214 1,18 1,1 Investment securities Other assets 4,894 4,894 4,894 4,894 Total assets 2,186 33,26 4,433 49,48 Accounts payable,244 7,142 8,26 9,24 Short-term debt 2,694 2,694 2,694 2,694 Other short term liabilities Total current liabilities 8,8 9,917 1,879 12,147 Long-term debt 7,664 1,664 1,664 1,664 Other liabilities (9.6) (9.6) (9.6) (9.6) Total liabilities 1,612 2,2 21,483 22,71 Shareholders' equity 9,197 12,334 18,2 26,233 Minority interests Total liabilities and equity 2,186 33,26 4,433 49,48 Key earnings drivers 12/1A 12/11E 12/12E 12/13E Macau mass-market GGR,486 7,43 9,14 11,66 Macau high-roller GGR 16,884 24,7 29,47 33, Macau slot machine GGR 1,73 1,427 1,764 2,89 StarWorld's market share Galaxy Macau's market Per share data 12/1A 12/11E 12/12E 12/13E Shares (wtd avg.) (mn) 3,936 4,91 4,119 4,17 EPS (Credit Suisse) DPS (HK$) BVPS (HK$) Operating CFPS (HK$) Key ratios and valuation 12/1A 12/11E 12/12E 12/13E Growth(%) Sales EBIT Net income (22) EPS (22) Margins (%) EBITDA margin 789 1,278 1,389 1,433 EBIT margin Pretax margin Net margin Valuation metrics (x) P/E P/B Dividend yield (%) P/CF EV/sales EV/EBITDA EV/EBIT ROE analysis (%) ROE ROIC Asset turnover (x) Interest burden (x) Tax burden (x) Financial leverage (x) Credit ratios Net debt/equity (%) (2.3) Net debt / EBITDA (x) Interest coverage ratio (x) Source: Company data, Thomson Reuters, Credit Suisse estimates MF P/B multiple Source: IBES MF P/E multiple Macau Gaming Sector 17

18 8 December 211 Asia Pacific / Hong Kong Casinos & Gaming Rating OUTPERFORM* [V] Price (7 Dec 11, US$) 9.7 Target price (US$) 14.2¹ Chg to TP (%) 46.4 Market cap. (US$ mn),34 Enterprise value (US$ mn) 6,196 Number of shares (mn) 1.3 Free float (%) week price range *Stock ratings are relative to the relevant country benchmark. ¹Target price is for 12 months. [V] = Stock considered volatile (see Disclosure Appendix). Share price performance Price (LHS) Research Analysts Gabriel Chan, CFA gabriel.chan@credit-suisse.com Rebased Rel (RHS) Dec-9 Apr-1 Aug-1 Dec-1 Apr-11 Aug The price relative chart measures performance against the HANG SENG INDEX which closed at on 7/12/11 On 7/12/11 the spot exchange rate was US$1./US$1 Performance over 1M 3M 12M Absolute (%) Relative (%) Melco Crown Entertainment- ADR (MPEL.OQ / MPEL US) Overhang removed Hong Kong dual listing removes an overhang. In our view, the announcement of its Hong Kong dual listing had been an overhang to the stock as some investors believed there could be a potential new equity issue, thus potential share dilution, as well as raising concerns about the company s cash flow. However, the company has opted for the option of listing by introduction with no new share issues. In our view, the removal of this overhang, plus the expanded investor base, should help MPEL catch up with the sector s revaluation, with the stock trading at a 33% discount to peers FY12E EV/EBITDA. Market-share momentum remains positive. MPEL s market share momentum remains positive, particularly in the mass-market segment, in which its City of Dreams (CoD) has been maintaining about a 1% market share. On the other hand, the opening of additional VIP rooms in late July helped MPEL recaptured some of the lost high-roller market share. Studio City on track. Regarding the development of the Studio City, MPEL is finalising design plans, while working with the Macau government to complete the necessary approval process. Management has maintained its target to start construction in 1Q12 and expects the new casino resort to open in early 21. Note: the revised capex budget is US$1.9 bn. Given that MPEL owns 6% of the project, and assuming a typical debt/equity ratio of 6%/4% for casino project financing in Macau, MPEL s cash contribution requirement would be about US$46 mn, which is less than its operating cash flow in FY12. Thus, we do not foresee any fund-raising need by the company. Reinstating our OUTPERFORM rating. We have revised up our FY11-13 earnings forecasts by 1-6% on the back of its strong market share momentum. Our target price is set at US$14.2, which is based on 1x FY12E EV/EBITDA. With 46% implied upside to our target price, we reiterate our OUTPERFORM rating on MPEL. Financial and valuation metrics Year 12/1A 12/11E 12/12E 12/13E Revenue (US$ mn) 2,642. 3, ,76.6 4,38.9 EBITDA (US$ mn) ,28.7 EBIT (US$ mn) Net income (US$ mn) EPS (CS adj.) (US$) Change from previous EPS (%) n.a Consensus EPS (US$) n.a EPS growth (%) n.m. n.m P/E (x) Dividend yield (%) EV/EBITDA (x) P/B (x) ROE (%) Net debt/equity (%) net cash Source: Company data, Thomson Reuters, Credit Suisse estimates Macau Gaming Sector 18

19 8 December 211 Melco Crown Entertainment-ADR MPEL.OQ / MPEL US Price (7 Dec 11): US$9.7, Rating:: OUTPERFORM [V], Target Price: US$14.2, Analyst: Gabriel Chan Target price scenario Scenario TP %Up/Dwn Assumptions Upside Central Case Downside Income statement (US$ mn) 12/1A 12/11E 12/12E 12/13E Total revenue 2,642 3,462 3,77 4,39 Cost of Goods Sold SG&A (excluding R&D) 2,217 2,64 2,86 3,28 R&D costs Other operating exp./(inc.) EBITDA ,29 Depr & amort (excl. goodwill) Goodwill impairment EBIT Net interest expense/(inc.) Non-operating inc./(exp.) Associates/JV Recurring PBT Exceptionals/extraordinaries (18.7) Taxes.92 Profit after tax (1.) Other after tax income Minority interests Preferred dividends Reported net income (1.) Analyst after tax adjustment Net income (Credit Suisse) (1.) Cash flow (US$ mn) 12/1A 12/11E 12/12E 12/13E EBIT Cash taxes paid Change in working capital 36.6 (88.8) (24.7) (6.8) Other cash & non-cash items Cash flow from operations Capex (121.6) (41.4) (29.) (31.6) Disposal of PPE Free cash flow to the firm Acquisitions Divestments Other investment/(outflows) Cash flow from investments (121.6) (41.4) (29.) (31.6) Net shares issued/(repurchased).11 Dividends paid Change in debt 41. Other financing cash flows Cash flow from financing 41.1 Effect of exchange rates (117.2) Movements in cash/equivs Balance sheet (US$ mn) 12/1A 12/11E 12/12E 12/13E Cash and cash equivalents ,392 2,26 Accounts receivable Inventory Other current assets Total current assets 9 1,28 1,83 2, Total fixed assets 2,672 2,726 2,63 2,496 Intangible assets and goodwill Investment securities Other assets Total assets 4,884,24,64 6,136 Accounts payable Short-term debt Other short term liabilities Total current liabilities Long-term debt 1,21 1,221 1,221 1,221 Other liabilities Total liabilities 2,361 2,36 2,366 2,369 Shareholders' equity 2,23 2,874 3,237 3,768 Minority interests Total liabilities and equity 4,884,24,64 6,136 Key earnings drivers 12/1A 12/11E 12/12E 12/13E Macau mass-market GGR,486 7,43 9,14 11,66 Macau high-roller GGR 16,884 24,7 29,47 33, Macau slot machine GGR 1,73 1,427 1,764 2,89 Altira's market share (%) City of Dreams' market Per share data 12/1A 12/11E 12/12E 12/13E Shares (wtd avg.) (mn) EPS (Credit Suisse) (.2) DPS (US$) BVPS (US$) Operating CFPS (US$) Key ratios and valuation 12/1A 12/11E 12/12E 12/13E Growth(%) Sales EBIT (166) Net income (97) (3,43) 3 46 EPS 97 3, Margins (%) EBITDA margin 1,24 1,971 1,97 2,23 EBIT margin Pretax margin Net margin (.4) Valuation metrics (x) P/E (487) P/B Dividend yield (%) P/CF EV/sales EV/EBITDA EV/EBIT ROE analysis (%) ROE (.4) ROIC Asset turnover (x) Interest burden (x) Tax burden (x) Financial leverage (x) Credit ratios Net debt/equity (%) (8.) Net debt / EBITDA (x) Interest coverage ratio (x) Source: Company data, Thomson Reuters, Credit Suisse estimates. 12MF P/B multiple Source: IBES MF P/E multiple Macau Gaming Sector 19

20 8 December 211 Asia Pacific / Hong Kong Casinos & Gaming MGM China Rating OUTPERFORM* [V] Price (7 Dec 11, HK$) 11.4 Target price (HK$) (from 17.2) 13.4¹ Chg to TP (%) 21.4 Market cap. (HK$ mn) 41,92 Enterprise value (HK$ mn) 41,94 Number of shares (mn) 3,8. Free float (%) week price range *Stock ratings are relative to the relevant country benchmark. ¹Target price is for 12 months. [V] = Stock considered volatile (see Disclosure Appendix). Research Analysts Gabriel Chan, CFA gabriel.chan@credit-suisse.com (2282.HK / 2282 HK) Potential dividends to drive re-rating Share price has been underperforming peers. The share price of MGM China has underperformed the sector. In our view, this is largely due to its slowing market-share momentum, in which MGM China s luck-adjusted market share slipped from its peak of 11.% in February to 9.4% in August, on the back of Galaxy s Galaxy Macau opening in mid-may. On the other hand, we believe that its more balanced revenue base, neither mass-market nor high-roller focused, has resulted in its being ignored by investors. Too cheap to ignore. MGM China is trading at 1.2x FY12E P/E or 6.8x FY12E EV/EBITDA, implying a 38% or 33% valuation discount against the sector average, respectively. In our view, such discounts are too steep to ignore. Also note that we project MGM China will generate the highest free cash flow yield of 11.8%, compared to the sector average of 4.8% (or 1.2% if excluding Sands China). Potential special dividend could be a positive catalyst. On the other hand, we project MGM China will become net cash positive by the end of FY11. With its potential new project in Cotai unlikely to start construction any time soon (we actually expect it to commence operation in 216 or later), we believe it is very likely for MGM China to distribute its excess cash in the form of a special dividend, if the new project approval has not been granted before the final results announcement in March 212. A long-term valuation convergence play. We reiterate our OUTPERFORM rating on MGM China on the back of its low valuation. However, we revise down its target price to HK$13.4 (based on 8.x FY12E EV/EBITDA, 21.4% potential upside) on the back of its relatively lacklustre earnings momentum, which also led us to revise down our FY11-13 earnings forecasts by 3-7%. Share price performance Jun-11 Price (LHS) Rebased Rel (RHS) Oct The price relative chart measures performance against the HANG SENG INDEX which closed at on 7/12/11 On 7/12/11 the spot exchange rate was HK$7.77/US$1 Performance over 1M 3M 12M Absolute (%) Relative (%) Financial and valuation metrics Year 12/1A 12/11E 12/12E 12/13E Revenue (HK$ mn) 12, , , ,398.2 EBITDA (HK$ mn) 2,83.8 4,639.,37. 6,2.6 EBIT (HK$ mn) 2,3.1 3, ,26.,41.3 Net income (HK$ mn) 1,66. 3,43.1 4,124.,11.8 EPS (CS adj.) (HK$) Change from previous EPS (%) n.a Consensus EPS (HK$) n.a EPS growth (%) n.m P/E (x) Dividend yield (%) EV/EBITDA (x) P/B (x) ROE (%) Net debt/equity (%) net cash net cash net cash Source: Company data, Thomson Reuters, Credit Suisse estimates Macau Gaming Sector 2

21 8 December 211 MGM China 2282.HK / 2282 HK Price (7 Dec 11): HK$11.4, Rating:: OUTPERFORM [V], Target Price: HK$13.4, Analyst: Gabriel Chan Target price scenario Scenario TP %Up/Dwn Assumptions Upside Central Case Downside Income statement (HK$ mn) 12/1A 12/11E 12/12E 12/13E Total revenue 12,43 19,219 21,42 24,398 Cost of Goods Sold 6,48 1,38 11,611 13,11 SG&A (excluding R&D) 3,124 4,221 4,62,82 R&D costs Other operating exp./(inc.) EBITDA 2,831 4,639,37 6,21 Depr & amort (excl. goodwill) Goodwill impairment EBIT 2,3 3,867 4,27,41 Net interest expense/(inc.) Non-operating inc./(exp.) (37.) (2.) (2.) (2.) Associates/JV Recurring PBT 1,66 3,439 4,128,17 Exceptionals/extraordinaries Taxes Profit after tax 1,66 3,43 4,124,12 Other after tax income Minority interests Preferred dividends Reported net income 1,66 3,43 4,124,12 Analyst after tax adjustment Net income (Credit Suisse) 1,66 3,43 4,124,12 Cash flow (HK$ mn) 12/1A 12/11E 12/12E 12/13E EBIT 2,3 3,867 4,27,41 Cash taxes paid (.3) (.2) (3.4) (4.1) Change in working capital Other cash & non-cash items Cash flow from operations 2,997,14,178 6,229 Capex (27.8) (192.2) (21.4) (244.) Disposal of PPE Free cash flow to the firm 2,739 4,822 4,963,98 Acquisitions Divestments 2.6 Other investment/(outflows) Cash flow from investments (2.1) (192.2) (21.4) (244.) Net shares issued/(repurchased) Dividends paid Change in debt (83) (1,) Other financing cash flows Cash flow from financing (83) (1,) Effect of exchange rates (1,96) Movements in cash/equivs. (3) 4,822 4,963 4,98 Balance sheet (HK$ mn) 12/1A 12/11E 12/12E 12/13E Cash and cash equivalents 1,923 6,744 11,77 16,692 Accounts receivable 1,21 1,922 2,14 2,44 Inventory Other current assets Total current assets 3,293 8,834 14,3 19,312 Total fixed assets,31 4,771 4,26 3,69 Intangible assets and goodwill 1,174 1,174 1,174 1,174 Investment securities Other assets Total assets 1,224 1,18 19,82 24,1 Accounts payable 2,76 4,228 4,739,368 Short-term debt 1, 1, Other short term liabilities Total current liabilities 2,87 4,382,894 6,23 Long-term debt,887,887 4,887 3,887 Other liabilities Total liabilities 8,743 1,269 1,78 1,41 Shareholders' equity 1,481 4,916 9,4 14,142 Minority interests Total liabilities and equity 1,224 1,18 19,82 24,1 Key earnings drivers 12/1A 12/11E 12/12E 12/13E Per share data 12/1A 12/11E 12/12E 12/13E Shares (wtd avg.) (mn) 3,8 3,8 3,8 3,79 EPS (Credit Suisse) DPS (HK$) BVPS (HK$) Operating CFPS (HK$) Key ratios and valuation 12/1A 12/11E 12/12E 12/13E Growth(%) Sales EBIT Net income (1,37) EPS 1, Margins (%) EBITDA margin 2,446 2,442 2,492 EBIT margin Pretax margin Net margin Valuation metrics (x) P/E P/B Dividend yield (%) P/CF EV/sales EV/EBITDA EV/EBIT ROE analysis (%) ROE ROIC Asset turnover (x) Interest burden (x) Tax burden (x) Financial leverage (x) Credit ratios Net debt/equity (%) 268 (17) (64) (83) Net debt / EBITDA (x) 1.4 (.18) (1.1) Interest coverage ratio (x) Source: Company data, Thomson Reuters, Credit Suisse estimates. 12MF P/B multiple Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Source: IBES 12MF P/E multiple Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Macau Gaming Sector 21