Gaming gross gaming revenue (GGR) fell by 33% YoY to MOP17,133 million, slightly better than the 35.5% YoY drop in August.
Daily GGR was MOP571 million, down 5% MoM.
The VIP segment saw a ~50% YoY decline, while mass GGR dropped ~15% YoY.
Full-Year Expectations:
The full-year 2015E GGR is expected to drop 34% YoY.
A 25% YoY decline is anticipated during October to December 2015.
October 2015 is expected to see a ~32% YoY drop.
Market Sentiment:
Weak macroeconomic conditions and junket capital flight continue to affect sector sentiment.
The Macau Studio City gaming table allocation remains an overhang.
The sector trades at 17.4x FY16E P/E and 11.8x EV/EBITDA, below the 3-year average.
Company Performance:
Sands China is expected to outperform due to its mass gaming exposure and industry-high dividend.
Other Market Highlights
Economic Data
Country/Region
Date
Event
Prior
Forecast
Germany
2015/10/05
Markit Services PMI
54.90
54.30
Euro zone
Markit Services Final PMI
54.40
54.00
Euro zone
Markit Composite Final PMI
54.30
53.90
Euro zone
Retail Sales MM
0.30%
-0.10%
U.S.
Markit Comp Final PMI
55.70
--
U.S.
ISM N-Mfg PMI
59.00
58.10
Germany
Industrial Output MM SA
0.70%
0.20%
U.S.
EIA Weekly Crude Stocks
3.96mn
--
U.S.
2015/10/08
Consumer Credit
19.10bn
20.00bn
Japan
Current Account NSA JPY
1,808.60bn
1,221.10bn
Japan
Machinery Orders MM
-3.60%
3.20%
China
2015/10/10
M2 Money Supply YY
13.30%
--
China
New Yuan Loans
RMB809.60bn
--
China
Outstanding Loan Growth
15.4%
--
Company Events
Date
Ticker
Company
Event
2015/10/05
5 HK
HSBC Holdings plc
3RD INT DIV
2015/10/05
11 HK
Hang Seng Bank Ltd.
3RD INT DIV
Research Highlights
A-share Research Highlights
Communication Industry:
The communication sector is expected to continue its rally, especially for growth companies.
Recommended companies include Glarun (600562 CH), Kingsignal (300252 CH), Shenzhen SED (000032 CH), Hytera (002583 CH), FiberHome (600498 CH), and Miteno (300038 CH).
State Council proposed 100% car park charging facilities for new residential buildings and 10% for large public buildings.
Tower companies are expected to take over charging pile operations, with ZTE (000063 CH), Potevio (600680 CH), Miteno (300038 CH), and China Unicom (600050 CH) recommended.
SOE Reforms:
The State Council issued guidance on mixed ownership reform for SOEs, emphasizing the importance of research institutes and communication equipment makers.
Recommended companies include Nanjing Panda (600775 CH), Glarun (600562 CH), Shenzhen SED (000032 CH), GCI Science (002544 CH), SunCreate (600990 CH), FiberHome (600498 CH), Datang Telecom (600198 CH), Eastern Communications (600776 CH), Yangtze Communications (600345 CH), Haige (002465 CH), and Fenghuo Electronics (000561 CH).
Private Network Development:
PDT projects are expected to be initiated in Fujian, Yunnan, Hebei, and Zhejiang, forming a RMB15 bn market in 3-5 years.
Sino-U.S. cooperation against terrorism is expected to drive public security private network development.
Recommended companies include Hytera (002583 CH), Eastern Communications (600776 CH), and Haige (002465 CH).
Risk Reminders
Increased competition
Slower implementation of related policies
Sluggish market demand
Summary of Research Coverage
Company
Ticker
Rating
Share Price (Oct 2)
12-Month TP % Upside
Market Cap (2014)
EPS 2015E
P/E 2014
P/E 2015E
P/E 2016E
Analyst
Brilliance China
1114 HK
BUY
HK$9.29
HK$12.5
35
0.16
0.24
0.31
6.9
8.7
China ZhengTong Auto
1728 HK
BUY
HK$3.3
HK$5.48
66
0.36
0.42
0.51
7.3
6.3
Geely Automobile
175 HK
BUY
HK$3.86
HK$4.0
4
0.16
0.24
0.31
19.1
12.9
BAIC Motor
1958 HK
BUY
HK$7.55
HK$12.81
70
0.70
0.81
1.07
8.6
7.5
Great Wall Motor
2333 HK
NEUTRAL
HK$9.68
HK$28.5
194
2.64
3.10
3.40
2.9
2.5
Fuyao Glass
3606 HK
BUY
HK$16.68
HK$22.7
36
1.11
1.10
1.22
11.9
12.1
China Harmony Auto
3836 HK
NEUTRAL
HK$4.14
HK$6.7
62
0.50
0.42
0.45
6.6
7.9
Zhongsheng Group
881 HK
NEUTRAL
HK$3.29
HK$4.75
44
0.35
0.39
0.48
7.5
6.8
Sinopec Oilfield Service
1033 HK
NEUTRAL
HK$2.57
HK$2.4
-7
0.16
-0.08
0.08
16.2
N.A.
China Oilfield Services
2883 HK
NEUTRAL
HK$7.95
HK$9.0
13
1.57
0.46
0.56
4.0
13.8
Petrochina
857 HK
BUY
HK$5.54
HK$9.3
68
0.59
0.37
0.41
12.0
10.9
CNOOC
883 HK
BUY
HK$8.18
HK$11.0
34
1.35
0.65
0.83
4.8
10.1
China Resources Land
1109 HK
BUY
HK$19.74
HK$23.8
21
1.96
2.15
2.63
10.1
9.2
KWG Property
1813 HK
BUY
HK$5.56
HK$5.9
6
0.10
0.12
0.14
5.2
4.6
Country Garden
2007 HK
NEUTRAL
HK$2.85
HK$2.7
-5
0.65
0.47
0.58
4.4
6.1
Agile Property
3383 HK
BUY
HK$4.19
HK$4.8
15
0.36
0.39
0.48
3.0
4.1
Greentown China
3900 HK
NEUTRAL
HK$5.99
HK$6.0
0
0.50
0.42
0.45
6.6
7.9
China Overseas Land
688 HK
BUY
HK$25.0
HK$30.0
20
3.39
3.51
3.86
7.4
7.1
Key Recommendations
Communication Sector: Focus on growth companies and SOE reforms.
Gaming Sector: Sands China is expected to outperform due to its mass gaming exposure and high dividend.
Private Network Development: Hytera, Eastern Communications, and Haige are recommended for public security private network development.
Charging Infrastructure: ZTE, Potevio, Miteno, and China Unicom are expected to benefit from EV charging infrastructure expansion.
