Equity Research

股
票
研
究 Sector Report: Gaming Sector Noah Hudson
行业报告：博彩行业 +86 2397 6684
noah.hudson@gtjas.com

21 December 2017

Strong Growth to Continue in 2018, Maintain "Outperform"

2018年将继续保持强劲增长,维持“跑赢大市”

行
Sector Report

 We forecast 2018 Macau gross gaming revenue ("GGR") growth of Rating: Outperform
业 15%-17%. We expect new gaming capacity coming online in 2018 to be a Maintained
significant growth catalyst. MGM China (02282 HK)'s new US$2.9 billion
报 评级： 跑赢大市 (维持)
MGM Cotai will open on 29 Jan. 2018 and will be ramping up for the
告 whole year. Also in 1H18, Morpheus Hotel at City of Dreams will open. In
2018, the HK-Zhuhai-Macau Bridge will open and the Macau
International Airport is expected to increase capacity from 6 mn Stock Performance
passengers to between 8 mn to 9 mn passengers. 股价表现 Melco Resorts & Entertainmen
% return
 GGR per visitor increased by 13.9% YoY to MOP8,233 for the first 10 120.0

months of 2017. Higher GGR per visitor is supported by a greater 100.0

80.0
number of higher quality visitors as indicated by more overnight visitors,
60.0
more airplane and helicopter visitors and longer duration of stay. 2017
40.0
year to date through October number of visitors to Macau increased by
20.0
4.6% YoY while the number of air arrivals increased by 12.7% YoY, the 0.0
number of overnight visitors increased by 10.4% YoY and the average (20.0)
Equity Research Report

证 stay duration increased by 3.4% YoY. At the end of 3Q17, there were (40.0)
证 券 研 究 报 告

52.1% more hotel projects under construction in Macau compared with at Dec/16 Feb/17 Apr/17 Jun/17 Aug/17 Oct/17 Dec/17
券 HSI SJM Hds.
the end of 3Q16. More hotel room capacity will be added in 2018 making Galaxy Ent. Wynn Macau
研 visitation to Macau easier for the higher number of overnight visitors that Melco Resorts MGM China
Sands China
究 are expected. Source: Bloomberg.

报  We recommend to "Buy" Melco Resorts & Entertainment (MLCO US)

and Wynn Macau (01128 HK). We also recommend to "Accumulate"
Sector Valuation
告 行业估值
Sands China (01928 HK) and MGM China (02282 HK). EV to BEst EBITDA (Next 4 Quarters)
Mean
 我们预计 2018 年澳门博彩总收入增速为 15%-17%。我们预期 2018 年新上线的博彩 +1 ST. DEV.
20
物业容量将成为重要的增长催化剂。美高梅中国（02282 HK）耗资 29 亿美元的美高 -1 ST. DEV.
梅路氹物业将会在 2018 年 1 月 29 日开幕，并将在一整年持续扩张运营。2018 年上 18

半年，摩珀斯酒店将会在新濠天地物业开幕。在 2018 年，港珠澳大桥将会开通，并 16

且澳门国际机场目前 600 万的旅客容量预期将会增加至 800 到 900 万。 14

 旅客人均博彩收入在 2017 年前 10 个月同比增长 13.9%至 8,233 澳门元。更高的旅 12

客人均博彩收入的支撑因素来自更多的高质量访客，比如留宿旅客、飞机旅客和直升
Gaming Sector

10
博 机旅客等，以及更长的逗留时间。截至 2017 年 10 月，访问澳门旅客数量同比增加了
8
彩 4.6%，而乘飞机来的旅客数量同比增长了 12.7%；另外，留宿旅客数量同比增长了
10.4%，并且平均逗留时间同比延长了 3.4%。2017 年 3 季度末，在建酒店客房数相 6
行 Dec/12 Dec/13 Dec/14 Dec/15 Dec/16 Dec/17
比于 2016 年 3 季度末增加了 52.1%。2018 年更多的酒店客房容量有利于访澳留宿旅 Source: Bloomberg.
业 客数量的进一步提高。

 我们建议“买入”新濠博亚（MLCO US），“买入”永利澳门（01128 HK）。也建

议“收集”金沙中国（01928 HK）和美高梅中国（02282 HK）。

[Table_CompanyFinance]
Company Name Code Price Rating 17 PER 18 PER 19 PER 17 ROE 17 P/B 17 Yield
公司名称 编号 股价(HK$) 投资评级 市盈率(x) 市盈率(x) 市盈率(x) 净资产收益(%) 市净率(x) 股息率(%)
Galaxy Entertainment 00027 63.100 Neutral 28.8 25.2 23.8 18.4 5.2 1.2
Melco Resorts & Entertainment MLCO US$28.470 Buy 31.6 27.1 22.5 12.0 4.7 1.4
MGM China 02282 24.000 Accumulate 38.0 33.5 22.5 29.7 10.8 1.7
Sands China 01928 40.250 Accumulate 26.9 22.9 20.6 32.3 9.1 5.2
Wynn Macau 01128 24.750 Buy 33.8 24.5 21.2 141.1 44.9 3.7
Weighted Average. 市值加权平均 30.1 25.3 22.0 40.7 12.6 3.0
Source: the Companies, Bloomberg, Guotai Junan International.

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 Gaming Sector

Contents
Macau Gross Gaming Revenue ......................................................................................................................... 3

21 December 2017
Macau Infrastructure Developments .................................................................................................................. 5
Macau Hotels ........................................................................................................................................................ 7
Macau Casinos Developments ........................................................................................................................... 9
Macau Visitors ..................................................................................................................................................... 11
Investment Suggestions .................................................................................................................................... 15
Appendix .............................................................................................................................................................. 17

Gaming Sector 博彩行业

Sector Report

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 Gaming Sector

Macau Gross Gaming Revenue

We forecast 2018 Macau gross gaming revenue ("GGR") growth of 15%-17%. Despite the strong 19.5% YoY growth in
Macau's GGR during the first 11 months of 2017, monthly GGR amounts are still well below the highs seen in 2014. This

21 December 2017
leaves significant room for growth as the sector just catches up with previous GGR levels. We expect new gaming capacity
coming online in 2018 to be a significant growth catalyst. MGM China (02282 HK)'s new US$2.9 billion MGM Cotai will open
on 29 Jan. 2018 and will be ramping up for the whole year. Later in 1H18, Melco Resorts & Entertainment (MLCO US) will
open its new flagship Morpheus Hotel at the Studio City property. Another major catalyst in 2018 will be the opening of the
Hong Kong-Zhuhai-Macau Bridge (also called the Delta Bridge).

During the first 11 months of 2017, Macau's GGR increased by 19.5% YoY, surpassing our full-year forecast of 16.5%
growth. The strong growth was supported by the continued ramp up of two new casinos (Wynn Palace and The Parisian
Macao) opened in late 2016, new infrastructure development (Taipa Maritime Terminal opened on 1 June 2017), and also a
low comparison base after GGR had declined for three consecutive years.

Figure-1: Macau Monthly Mass GGR Amount & Growth Figure-2: Macau Quarterly Total, VIP & Mass GGR
Growth
MOP mn Mass GGR YoY (R) Total GGR (YoY) VIP (YoY) Mass (YoY)
14 20%
40% 34.8% 35.0%
12 10%
30%
16.8% 21.8%
10 21.9%
0%
20% 12.7%
8
-10% 13.0% 7.4%
10% 3.9%
6
1.2% 10.2% 8.5% 8.1%
-20% 0% -1.1% 7.3%
4
-9.2%
-30% -1.2%
2 -10%

- -40% -20% -15.7%

2014-6 2015-6 2016-6 2017-6 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
Source: Gaming Inspection and Coordination Bureau of Macao SAR. Source: Gaming Inspection and Coordination Bureau of Macao SAR.

Figure-3: Macau Monthly VIP GGR Amount & Growth Figure-4: Macau Monthly Mass GGR Amount & Growth

Gaming Sector 博彩行业

MOP mn VIP GGR YoY (R) Mass GGR YoY (R)
MOP mn
18 60% 12 17.0% 20%
52.8%
16 52.2% 15.9%
50% 10 13.2%
14 12.6% 15%
36.2%
12 40% 8
10 11.4% 10%
35.0% 30% 5.3% 5.8%
22.4% 6
8 22.5% 30.1% 4.0%
5%
6 12.9% 20% 4 5.9%
8.7% 20.4%
4 19.3% 19.2% 0%
10% 2
2 2.5% -1.5%
-3.2%
- 0% - -5%

Source: Gaming Inspection and Coordination Bureau of Macao SAR, Source: Gaming Inspection and Coordination Bureau of Macao SAR,
Bloomberg. Bloomberg.
Note: Monthly VIP and Mass are estimates from IMC, a Macau based Note: Monthly VIP and Mass are estimates from IMC, a Macau based
consultancy. consultancy.

Despite the rapid GGR growth, monthly GGR amounts have still been significantly less than the highs reached in
2013 and 2014, indicating further room for recovery. 2017 year to date through October (November data is not yet
available), VIP GGR and Mass GGR increased by 29.0% YoY and 8.1% YoY, respectively. So far in 2017, total monthly GGR
was the highest in Oct. at MOP26.6 billion, which is still 29.9% less than the all-time high GRR amount of MOP38.0 billion
Sector Report

reached in Feb. 2014. The gap is even larger for the VIP segment. Year to date, monthly VIP GGR was the highest in Oct. at
MOP15.9 billion, which is still 36.5% less than the high of MOP25.0 billion reached in Feb. 2014. We think this implies that
there is still significant room for continued growth in 2018 as the sector catches up with previous highs.

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 Gaming Sector

Figure-5: Macau Monthly Total GGR Amount & Growth Figure-6: Macau Monthly VIP GGR Amount & Growth
MOP mn Total GGR (L) YoY (R) MOP mn VIP GGR YoY (R)
40 50% 18 80%
35 40% 16 60%
30% 14

21 December 2017
30 20% 40%
12
25 10%
0% 10 20%
20
-10% 8 0%
15 -20% 6
-30% -20%
10 4
-40%
5 2 -40%
-50%
0 -60% - -60%
2013-11 2014-11 2015-11 2016-11 2017-11 2014-6 2015-6 2016-6 2017-6
Source: Gaming Inspection and Coordination Bureau of Macao SAR. Source: Gaming Inspection and Coordination Bureau of Macao SAR.

GGR per visitor has increased YoY every quarter since 3Q16. GGR per visitor increased by 7.0%, 15.8% and 19.4% in
1Q17, 2Q17 and 3Q17, respectively. With the exception of Feb. 2016 (due to Chinese New Year effect), GGR per visitor
decreased YoY for 25 consecutive months from June 2014 to July 2016. Then in August 2016, GGR per visitor increased by
6.4% YoY, followed by YoY increases in every month since then, with the exception of Jan. 2017 due to Chinese New Year
effect. The change to a positive growth trend in GGR per visitor is a positive sign for the sector and indicates that sustainable
recovery is underway. The higher GGR per visitor coincides with a greater number and proportion of higher quality visitors
going to Macau as indicated by more overnight visitors, more airplane and helicopter visitors and longer stay duration.

Figure-7: Macau Quarterly GGR per Visitor Amount & Figure-8: Macau Monthly GGR per Visitor Amount &
Growth Growth
GGR per Visitor YoY Total GGR (L) YoY (R)
MOP thousand MOP thousand
10 40% 10 23.7% 24.8% 30%
19.4% 24.8%
9 7.0% 9 25%
1.1% 20%
8 8 11.7% 20%
7 -13.8% 15.8% 0% 7 14.4% 13.2%
19.2% 21.1% 15%
6 7.2% 6
-8.8% -20% 4.8% 10%
5 5 1.1% 13.3%
4 -40% 5%
4
3 -75.0% -60% 3 0%
-79.9%

Gaming Sector 博彩行业

2 2 -5%
-80%
1 -75.7% -73.3% 1 -10%
-12.3%
- -100% - -15%

Source: Government of Macao Special Administrative Region Statistics and Source: Government of Macao Special Administrative Region Statistics and
Census Service. Census Service.
Sector Report

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 Gaming Sector

Macau Infrastructure Developments

New infrastructure, both leading into Macau and within Macau, will allow for sustained visitation growth in the
coming quarters and years. Major projects include the Taipa Maritime Terminal, the Hong Kong-Zhuhai-Macau Bridge, the

21 December 2017
Airport expansion, the Macau Intercity Light Rail Transit ("LRT") and the Zhuhai-Macau New Channel Pedestrian Border.

Table-1: Macau Infrastructure Projects

Current Planned Visitor Planned Operational
Capacity Capacity Date

Taipa Maritime Terminal 400,000 / day 400,000 / day Operational

HK-Zhuhai-Macau Bridge (Delta Bridge) 0 84 mn to 91 mn / 2018
year*
Macau International Airport Expansion 6 million / Year 8 to 9 mn / year 2018
Macau Intercity Light Rail Transit - Cotai Section 0 n.a. 2019?
Zhuhai-Macau New Channel Pedestrian Border 0 200,000 / day 2019?
Macau Intercity Light Rail Transit - Macau Peninsula Section 0 n.a. Not Scheduled
Source: Guotai Junan International.
Note*: By 2035, the HK-Zhuhai-Macau Bridge is expected to handle 50,000 to 60,000 vehicles per day, allowing for 230,000 to 250,000 person-border crossings
per day (84 million to 91 million per year).

We expect that Macau's new Taipa Maritime Terminal, which opened on 1 June 2017, will serve as a catalyst for
increased visitation to Macau in 2018 as it ramps up. The Taipa Maritime Terminal (previously known as "Pac On" or
"Taipa") opened with just 8 of its total 16 berths in operation. Upon opening in June, the number of ferry operators, sailings and
routes available at the new facility was about the same as the previous old temporary Taipa ferry terminal, which is no longer
in operation and has been demolished. At the end of August, Macau Outer Harbour Ferry Terminal and Taipa Maritime
Terminal both sustained damage during the rampage of Typhoon Hato, which slowed down the ramping up of the new
terminal. However, according to Macau’s Marine and Water Bureau, the number of passengers using the Taipa Maritime
Terminal will increase gradually, although no ramp-up schedule has been disclosed. We expect that the ramping up will be a
catalyst for increased visitor travel to Macau in 2018.

The Taipa Maritime Terminal is located near the Macau airport and will facilitate more tourists travelling to Cotai

Gaming Sector 博彩行业

casino resorts. The terminal is located on the northeast side of Taipa, which borders the northern side of Cotai. Previously,
many Macau visitors arrived by ferry at the Macau Peninsula and then would have to either take a shuttle bus or taxi to go to
Cotai. We expect the new Taipa Maritime Terminal to significantly benefit the Cotai casinos.

Figure-9: Map - Macau Peninsula, Taipa and Cotai Figure-10: Map - Cotai Casinos

Sector Report

Source: http://macautripping.com. Source: Las Vegas Sands (LVS US).

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 Gaming Sector

The Hong Kong-Zhuhai-Macau Bridge (also called the Delta Bridge) will open sometime in 2018. According to an
announcement in mid Dec. 2017 from Hong Kong’s Chief Secretary for Administration, Matthew Cheung, construction of the
bridge is still scheduled to complete by the end Dec. 2017. The three governments of Hong Kong, Zhuhai and Macau are still
working to on an official opening date, but such date will be in 2018. The 55-kilometer (34.2-mile) US$15.9 billion (HK$110

21 December 2017
billion) bridge commenced construction on 15 Dec. 2009 and had previously been planned to open in 2016, but was
repeatedly delayed by a number of formidable engineering challenges. Traffic on the bridge will be constrained by a quota
system for buses and cars, the details of which are yet to be finalized.

Figure-11: Hong Kong–Zhuhai–Macau Bridge

Source: Time Out Hong Kong.

We expect that Phase One of the Macau Intercity Light Rail Transit Figure-12: Macau Intercity Light Rail
(LRT), which is expected to open in 2019, will be a major catalyst to Transit System
Cotai strip visitation. Phase One (Blue Line) of the LRT began construction
on the 21 Feb. 2012 and could open as early as 2019, but more likely will not

Gaming Sector 博彩行业

be ready until 2020. Phase One will have 11 stations and is 5.8 miles (9.3
kilometers) long.

LRT Phase One will be a major catalyst for visitation to Cotai casino
resorts as it will greatly ease local traffic congestion. The LRT is a critical
development for Macau's infrastructure as it will ease inter-city traffic
congestion, a key concern among locals who want to cap the number of
mainland visitors. The LTR will also make it very easy for visitors to travel to
Coati casinos since it connects visitors to the Taipa Maritime Ferry Terminal,
Lotus Checkpoint, the Macau Peninsula and the Macau airport. It also has
stops all along the Cotai Strip.

No timetable has yet been announced for the start of construction on

the Macau peninsula section of the rail link. The Macau government may
revise the planned route for the peninsula sections of the LTR.
Sector Report

Source: Macau Transportation Infrastructure Office.

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 Gaming Sector

Figure-13: Macau Intercity Light Rail Transit System, Figure-14: Macau Intercity Light Rail Transit System,
Cotai Section (Phase One) Peninsula Section

21 December 2017
Source: Macau Transportation Infrastructure Office. Source: Macau Transportation Infrastructure Office.

The Macau International Airport is expected to increase capacity from 33% to 50%, or from 6 million to 8-9 million
passengers per year in 2018. The Macau International Airport Company (CAM) plans to increase airport capacity by
extending the passenger terminal. CAM expects the expansion to be completed in 2018, increasing airport capacity from 6
million passengers per year currently to 8-9 million. However, the airport's current capacity hasn’t been reached yet; there
were only 2.4 million arrivals at the Macau Airport in 2016. The expansion is expected to allow for more airlines and flight
routes. We think that the airport expansion is Macau’s least important infrastructure project since a relatively low proportion
(8.1% during the first five months of 2017) of Macau visitors arrive via the airport.

Macau Hotels

The strongest typhoon in 53 years struck Macau on 23 Aug. 2017, negatively impacting travel and casino operations.
Typhoon Hato ravaged Macau with wind speeds of 200 kilometres per hour (124 mph). Roads and other transportation
infrastructure were damaged and not back to normal for several days to weeks. Group tours from mainland China were
suspended until 2 September. Immediately after the typhoon, many facilities and hotels throughout Macau, including casinos,

Gaming Sector 博彩行业

were without power for several hours, but most casinos sustained only minor damage and resumed normal operations within
a few days. Only two casinos were closed for a significant amount of time. SJM (00278 HK)’s Legend Palace casino and hotel
was closed until 20 Sept. GEG's Broadway was closed for over a month and did not reopen until 25 September.

Macau's total hotel occupancy rate for star rated hotels increased YoY every single month since June 2016, with the
exception of Aug. 2017, which was negatively impacted by typhoon Hato. There was a 6.6 ppt YoY increase in the total
occupancy rate in June 2016, which was followed by positive growth for every reported month since then, with the exception
of Aug. 2017. Most recently, total occupancy rate increased YoY by an average of 3.9 ppt. in the first ten months of 2017.

Figure-15: Macau Star Rated Hotel Occupancy Rates Figure-16: Macau Star-Rated Hotel Occupancy Rates
(Monthly) YoY Change (Monthly)
Total 5-star 4-star 3-star 2-star Total 5-star 4-star 3-star 2-star
100% 20
90.2% 91.3% 15
87.2% 88.7%
87.5% 87.0% 86.6% 85.7%
90% 87.1%
84.6% 10 6.2 5.5 6.4
86.0% 4.4 5.3 3.9 4.1
5 2.4 1.8 2.7 3.3
80% 82.0% 83.2% 7.3
0
70% -5
Sector Report

(4.4)
-10
60%
2016-10 2017-1 2017-4 2017-7 2017-10
2016-10 2017-1 2017-4 2017-7 2017-10
Source: the Companies, Government of Macao Special Administrative Region Source: the Companies, Government of Macao Special Administrative Region
Statistics and Census Service, Guotai Junan International. Statistics and Census Service, Guotai Junan International.

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 Gaming Sector

The number of star rated hotel rooms in Macau increased by 1.8% from the end of 2016 through October 2017. With
the opening of Wynn Palace and the Parisian Macao, a total of 4,161 new hotel rooms (mostly at 3-star hotels) went online in
the last few months of 2016. However, since the end of 2016 through October 2017, a total of only 651 more star rated hotel
rooms were in operation in all of Macau. In October 2017, there were a total of 36,300 star rated hotel rooms in Macau, 61.4%

21 December 2017
of which were 5-star hotels, 21.2% were 4-star hotels, 15.4% were 3-star hotels and just 1.9% were 2-star hotels.

Figure-17: Macau Number of Star-Rated Hotel Rooms Figure-18: YoY Growth in Number of Macau Star Rated
Hotel Rooms
Total 5-star 4-star 3-star 2-star Total 5-star 4-star 3-star 2-star
('000)
36.3 150%
40 35.6
31.7
27.1 27.3 100%
30

20 50%
16.1% 12.6%
6.7% 0.6% 2.0%
10 0%

0 -50%
2013 2014 2015 2016 Oct-17 2013 2014 2015 2016 Oct-17

Source: the Companies, Government of Macao Special Administrative Region Source: the Companies, Government of Macao Special Administrative Region
Statistics and Census Service, Guotai Junan International. Statistics and Census Service, Guotai Junan International.

More hotel room capacity will be added in 2018 making it easier for the higher number of overnight visitors expected
to go to Macau. According to Macau's Land, Public Works and Transport Bureau, at the end of 3Q17 there was a total of 21
hotel projects under construction with a total of 8,524 rooms, which was 52.1% more than at the end of 3Q16 and 33.8% more
than at the end of 2016. The hotel projects under construction had a total construction area of 625,429 sq.m., up 22.1% YoY
and 7.2% since the end of 2016. Of the hotels under construction, many are expected to open in 2018, although the exact
number is not reported. We think that the newly added hotel rooms in 2018 will be good for Macau casino operators as the
new capacity will alleviate pressure, especially during weekends and peak holiday seasons.

Table-2: Macau Star Rated Hotel Rooms Inventory

2013 2014 2015 2016 2017*
5-star hotels 18,371 18,379 20,610 21,794 22,300

Gaming Sector 博彩行业

4-star hotels 5,565 5,566 7,719 7,724 7,700
3-star hotels 2,412 2,526 2,528 5,477 5,600
2-star hotels 780 815 812 654 700
Total 27,128 27,286 31,669 35,649 36,300
Source: Government of Macao Special Administrative Region Statistics and Census Service, Guotai Junan International.
Note*: 2017 data is as of end of Oct.

Table-3: Macau Star Rated Hotel Rooms Inventory Growth

2013 2014 2015 2016 2016
5-star hotels 10.5% 0.0% 12.1% 5.7% 2.3%
4-star hotels 0.1% 0.0% 38.7% 0.1% -0.3%
3-star hotels 0.1% 4.7% 0.1% 116.7% 2.2%
2-star hotels -6.9% 4.5% -0.4% -19.5% 7.0%
Total 6.7% 0.6% 16.1% 12.6% 1.8%
Source: Government of Macao Special Administrative Region Statistics and Census Service, Guotai Junan International.
Note*: 2017 data is as of end of Oct.

Sands China (01928 HK) will remain as Macau's largest gaming operator in terms of number of hotel rooms in 2018.
With the completion of the Parisian Macao in Sept. 2016, Sands China increased its portfolio to a total of 12,949 hotel rooms
and suites, accounting for 53.1% of all gaming operator hotel room supply in Macau. Even with no planned hotels additions,
Sands China will remain the leader in terms of number of hotel rooms through 2018, although its proportion of hotel rooms
Sector Report

among casino operators is expected to decline to 44.0% by then.

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 Gaming Sector

Table-4: Macau Market Gaming Operator Hotel Rooms Inventory

2016 2017F 2018F
Hotel % of Total Hotel % of Total Hotel % of Total
Gaming Operator
Rooms Rooms Rooms

21 December 2017
Sands China (01928 HK) 12,949 53.1% 12,949 48.6% 12,949 44.0%
Galaxy Entertainment (00027 HK) 4,100 16.8% 4,100 16.6% 4,100 15.0%
Melco Resorts (MLCO US) 3,230 13.2% 3,230 12.4% 4,010 13.9%
SJM Holdings (00880 HK) 821 3.4% 1,174 3.2% 3,174 9.8%
Wynn Resorts (01128 HK) 2,708 11.1% 2,708 10.4% 2,708 9.4%

MGM China (02282 HK) 582 2.4% 582 8.0% 2,082 7.2%

Total 24,390 100.0% 26,243 100.0% 29,023 100.0%

Source: the Companies, Guotai Junan International.

Macau Casinos Developments

Gaming table capacity expected to increase by 4.3% in 2018. US$7.3 billion and US$6.9 billion in new casino
development capex went into operation in 2015 and 2016, respectively. In 2017 and 2018, new casino resort development
capex of US$0.1 billion and US$9.2 billion is expected to go into operation, respectively. Wynn Palace and The Parisian
Macao were allowed to add 25 more gaming tables each on 1 January 2018. The next major gaming table capacity increase
that will go into operation is the US$2.9 billion MGM Cotai, which will open on 29 Jan. 2018. The last of the planned casino
resorts is SJM’s (00880 HK) US$3.9 billion Lisboa Palace, which is expected to open towards the end of 2018.

Table-5: Macau Gaming Tables, Slots Machines and Hotel Rooms, 2013-2018F
Total Growth
2013A 2014A 2015A 2016A 2017F 2018F 2016-2018 CAGR
2016 to 2018
Gaming Tables 5,750 5,711 5,957 6,287 6,367 6,617 5.6% 2.6%
yoy Growth 4.8% -0.7% 4.3% 5.5% 1.3% 3.9%

Slot Machines 13,106 13,018 14,578 13,826 14,017 16,517 19.5% 9.3%
1.4% 17.8%

Gaming Sector 博彩行业

yoy Growth -21.0% -0.7% 12.0% -5.2%

Casino Hotel Rooms 16,690 16,690 18,087 21,090 21,643 25,923 22.9% 10.9%
yoy Growth 20.4% 0.0% 8.4% 16.6% 2.6% 20.9%
Source: Gaming Inspection and Coordination Bureau Macao SAR, Wynn Macau (01128 HK), MGM China (02282.HK), Sands China (01928 HK), SJM (00880
HK), Galaxy Entertainment (00027 HK), The 13 Hld. (00577 HK) & Melco Resorts & Entertainment (MLCO US), Guotai Junan International.

Table-6: Macau Total Number of Casinos by Company, 2013-2018F

Operators 2013A 2014A 2015A 2016A 2017F 2018F
S.J.M. (00880 HK) 20 20 20 20 21 22
Sands China (01928 HK) 4 4 4 5 5 5
Galaxy (00027 HK) 6 6 7 6 6 6
Wynn Macau (01128 HK) 1 1 1 2 2 2
Melco Resorts & Entertainment (MLCO US) 3 3 4 4 4 4
MGM China (02282 HK) 1 1 1 1 1 2
The 13 Holdings (00577 HK) 0 0 0 0 0 1
TOTAL 35 35 37 38 39 42
Source: Gaming Inspection and Coordination Bureau Macao SAR, the Companies, Guotai Junan International.

Sands China announced plans to make capital expenditures of over US$1 billion over the next several years to
upgrade and improve its Sands Cotai Central property and strategically increase its high-end suite accommodation
Sector Report

with full-scale development of the St. Regis and Four Seasons apartment hotel towers. Sands Cotai Central will be
renovated and rebranded as "The Londoner", expected to open sometime in late 2019. Sands China plans to begin the
development in 2Q18 with completion expected about 18 to 24 months thereafter, thus creating a third European themed
casino resort destination.

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 Gaming Sector

Table-7: Macau Planned Casino Development Timeline

New
Capex Gaming New New Hotel
Opening Developer Project Name Current Status (US$ bn) Tables Slots Rooms
27 May 2015 Galaxy Ent. (00027 HK) Broadway at Galaxy Macau Operating US$1.1 150 320

21 December 2017
27 May 2015 Galaxy Ent. (00027 HK) Galaxy Macau Phase II Operating US$3.0 150 1,000 1,250
27 Oct. 2015 Melco Ent. (MLCO US) Studio City Operating US$3.2 200 1,500 1,600
2015 Total Additions: US$7.3 350 2,650 3,170

1 Jan. 2016 Melco Ent. (MLCO US) Studio City Additional Tables n.a. 50 0 0
22 Aug. 2016 Wynn Macau (01128 HK) Wynn Palace Operating US$4.1 100 1,000 1,700
13 Sept. 2016 Sands China (1928 HK) The Parisian Macao (Sands) Operating US$2.7 100 2,500 3,300
2016 Total Additions: US$6.8 250 3,500 5,000

1 Jan. 2017 Wynn Macau (01128 HK) Wynn Palace Additional Tables n.a. 25 0 0
1 Jan. 2017 Sands China (1928 HK) The Parisian Macao (Sands) Additional Tables n.a. 25 0 0
27 Feb. 2017 SJM Hds. (00880 HK) Legend Palace Hotel Operating US$0.0 15 91 223
2H 2017 SJM Hds. (00880 HK) Hotel Jai Alai Operating US$0.1 15 100 130
2017 Total Additions: US$0.1 80 191 353

1 Jan. 2018 Wynn Macau (01128 HK) Wynn Palace Additional Tables n.a. 25 0 0
1 Jan. 2018 Sands China (1928 HK) The Parisian Macao (Sands) Additional Tables n.a. 25 0 0
29 Jan. 2018 MGM China (02282 HK) MGM Cotai Under Construction US$2.9 100 1,500 1,500
31 Mar. 2018 The 13 Hld. (00577 HK) The 13 (formerly Louis XIII) Under Construction US$1.4 0 0 200
Morpheus Hotel (Studio
1H 2018 Melco Ent. (MLCO US) Under Construction US$1.0 0 0 780
City)
2018 SJM Hds. (00880 HK) Lisboa Palace (SJM) Under construction US$3.9 100 1,000 2,000

2018 Total Additions: US$9.2 275 2,500 4,480

Conversion of Sands Cotai

Late 2019 Sands China (1928 HK) Central to The Londoner Planning US$1.1 n.a. n.a. 645
Macao
2019 Total Additions: US$1.1 n.a. n.a. n.a.
Source: Guotai Junan International, Wynn Macau (01128 HK), MGM China (02282.HK), Sands China (01928 HK), SJM (00880 HK), Galaxy Entertainment (00027
HK), The 13 Holdings (00577 HK) & Melco Resorts & Entertainment (MLCO US).

Gaming Sector 博彩行业

Sector Report

See the last page for disclaimer Page 10 of 19

 Gaming Sector

Macau Visitors

The number of visitors to Macau increased by 4.6% YoY in 2017 year to date through October. There were a total of
26.7 million visitors to Macau in the first ten months of the year. The number of mainland China visitors increased by 7.0% YoY

21 December 2017
for the same period and accounted for 67.9% of all visitors.

The number of visitors from all regions of mainland China increased in 2017 year to date through October. During Jan.
through Oct. 2017, the number of mainland visitors from east China increased the most, up 15.8% YoY, followed by a 14.6%
YoY increase in visitors from northern China. South Central China saw the lowest growth at a still decent 3.9%. Guangdong
was still the dominant source of mainland China visitors, although the proportion of total mainland visitors from Guangdong
province decreased by 3.0 ppt YoY to 50.2%.

Figure-19: Macau Number of Monthly Visitors, YoY Growth

Total Visitors Mainland China Visitors

20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%

Source: Government of Macao Special Administrative Region Statistics and Census Service.

Figure-20: Macau Visitors by Place of Origin, YoY Figure-21: Macau Visitors by Place of Origin, % of Total
Growth
Mainland China Hong Kong Mainland China Hong Kong Taiwan, China Other

Gaming Sector 博彩行业

Taiwan, China Total
20% 100%
10.0% 9.2% 9.1% 9.7% 9.6%
14.1% 3.4% 3.0% 3.2% 3.5% 3.3%
10.2% 80% 20.4% 21.3% 20.7% 19.2%
23.1%
10% 3.6% 8.8%
7.5% 7.0% 60%
4.4% 1.7%
0.8% 4.6% 40%
0% 63.5% 67.4% 66.5% 66.1% 67.9%
-4.4% -5.0% -1.0% 20%
-4.0% 0.2%
-4.7% -3.5%
-2.6% -1.8% 0%
-10% -6.6% 2013 2014 2015 2016 2017 Jan-
2013 2014 2015 2016 2017 Jan- Oct
Oct
Source: Government of Macao Special Administrative Region Statistics and Source: Government of Macao Special Administrative Region Statistics and
Census Service. Census Service.
Sector Report

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 Gaming Sector

Figure-22: PRC Visitors by Region, % of Total Figure-23: PRC Visitors by Region, Growth (YoY)
South Central China East China South Central China East China
Northern China Northeast China Northern China Northeast China
Southwest China Northwest China Southwest China Northwest China
100% 30%
4.4% 15.8%
4.5% 4.9% 4.6% 4.3% 14.4%
6.6% 7.0% 6.1% 5.8% 20%

21 December 2017
80% 5.7% 14.6%
20.8% 20.5% 19.5% 18.8% 20.0%
10% 12.5%
60% 8.8%
0% 3.9%
40%
63.3% 62.9% 64.9% 66.9% 65.4% -10%
20%
-20%
0% -30%
2013 2014 2015 2016 2017 Jan- 2014 2015 2016 2017 Jan-Oct
Oct

Source: Government of Macao Special Administrative Region Statistics and
Census Service.
Note*: South Central China includes Guangdong, Hunan, Hubei, Henan and,
Guangxi;
East China includes Fujian, Zhejiang, Jiangsu, Shanghai, Jiangxi, Shandong
and Anhui;
North China includes Beijing, Hebei, Shanxi, Inner Mongolia and Tianjin;
Northeast China includes Liaoning, Heilongjiang and Jilin;
Southwest China includes Sichuan and Chongqing;
Northwest China includes Shaanxi.
Source: Government of Macao Special Administrative Region Statistics and
Census Service.
Note*: South Central China includes Guangdong, Hunan, Hubei, Henan and,
Guangxi;
East China includes Fujian, Zhejiang, Jiangsu, Shanghai, Jiangxi, Shandong
and Anhui;
North China includes Beijing, Hebei, Shanxi, Inner Mongolia and Tianjin;
Northeast China includes Liaoning, Heilongjiang and Jilin;
Southwest China includes Sichuan and Chongqing;
Northwest China includes Shaanxi.

Table-8: PRC Visitors by Province/Municipality and by Region, % of Total

2014 2015 2016 2017 Jan-Oct
Province/Region
Guangdong 49.5% 51.1% 52.4% 50.2%
Hunan 4.1% 4.6% 5.1% 5.3%
Fujian 5.0% 4.9% 4.5% 4.5%
Hubei 3.7% 3.8% 3.6% 4.0%
Guangxi 2.8% 3.1% 3.3% 3.4%
Zhejiang 3.8% 3.3% 3.3% 3.5%
Shangai 3.0% 2.8% 3.0% 3.3%
Jiangsu 3.2% 2.9% 2.7% 3.1%
Jiangxi 2.5% 2.5% 2.5% 2.8%
Henan 2.8% 2.5% 2.5% 2.5%
Sichuan 2.2% 2.3% 2.1% 2.2%

Gaming Sector 博彩行业

Beijing 2.1% 1.9% 1.9% 1.9%
Liaoning 1.9% 1.9% 1.7% 1.7%
Anhui 1.4% 1.5% 1.4% 1.4%
Hebei 1.9% 1.6% 1.4% 1.5%
Helongjiang 1.7% 1.5% 1.4% 1.5%
Shandong 1.7% 1.6% 1.4% 1.5%
Chongqing 1.4% 1.4% 1.3% 1.3%
Jilin 1.3% 1.2% 1.2% 1.1%
Shanxi 1.4% 1.2% 1.1% 1.1%
Shaanxi 1.1% 1.1% 0.9% 1.0%
Tianjin 0.8% 0.7% 0.7% 0.7%
Inner Mongolia 0.8% 0.6% 0.6% 0.6%

Region*
South Central China 62.9% 64.9% 66.9% 65.4%
East China 20.5% 19.5% 18.8% 20.0%
North China 7.0% 6.1% 5.7% 5.8%
Northeast China 4.9% 4.6% 4.4% 4.3%
Southwest China 3.6% 3.7% 3.4% 3.5%
Northwest China 1.1% 1.1% 0.9% 1.0%
Source: Government of Macao Special Administrative Region Statistics and Census Service.
Note*: South Central China includes Guangdong, Hunan, Hubei, Henan and, Guangxi;
East China includes Fujian, Zhejiang, Jiangsu, Shanghai, Jiangxi, Shandong and Anhui;
North China includes Beijing, Hebei, Shanxi, Inner Mongolia and Tianjin;
Sector Report

Northeast China includes Liaoning, Heilongjiang and Jilin;

Southwest China includes Sichuan and Chongqing;
Northwest China includes Shaanxi.

See the last page for disclaimer Page 12 of 19

 Gaming Sector

2017 year to date through October, 49.5% of Macau’s visitors arrived via the Gongbei border crossing in Zhuhai. Of all
Macau visitors, 57.4% arrived by land, 34.2% by ferry boat and only 8.4% by air during Jan. through Oct. 2017. A number of
infrastructure projects are still under works or are being planned and will make for easier access to and within Macau when
completed. The expanded capacity for handling incoming travelers will help shorten time at the borders and encourage more

21 December 2017
tourist arrivals.

Table-9: Macau Visitors by Entry Point

2013 2014 2015 2016 2017 Jan-Oct
NUMBER OF VISITORS
Gongbei Border Gate 14,250 15,574 15,176 15,477 13,239
Other land 1,568 1,816 2,034 2,282 2,101
By land 15,817 17,390 17,211 17,760 15,340

Outer Harbour 7,072 7,363 6,993 6,537 5,625

Inner Harbour 503 473 322 12 -
Taipa Ferry Terminal 3,982 4,244 4,099 4,229 3,515
By sea 11,558 12,081 11,414 10,777 9,140

Airport 1,907 2,027 2,077 2,405 2,233

Heliport (Outer Harbour) 43 28 13 9 10
By air 1,950 2,055 2,090 2,413 2,243

Total 29,325 31,526 30,715 30,950 26,724

GROWTH
Border Gate 4.9% 9.3% -2.6% 2.0% 2.5%
Other land 26.5% 15.8% 12.0% 12.2% 10.9%
By land 6.7% 9.9% -1.0% 3.2% 3.6%

Outer Harbour 0.4% 4.1% -5.0% -6.5% 5.9%

Inner Harbour -7.0% -5.9% -31.9% -96.2% -100.0%
Taipa Ferry Terminal 2.1% 6.6% -3.4% 3.2% 2.5%
By sea 0.6% 4.5% -5.5% -5.6% 4.4%

Airport 9.6% 6.3% 2.5% 15.8% 12.6%

Heliport (Outer Harbour) 49.9% -34.7% -54.5% -32.9% 51.4%

Gaming Sector 博彩行业

By air 10.3% 5.4% 1.7% 15.5% 12.7%

Total 4.4% 7.5% -2.6% 0.8% 4.6%

% OF TOTAL VISITORS
Gongbei Border Gate 48.6% 49.4% 49.4% 50.0% 49.5%
Other land 5.3% 5.8% 6.6% 7.4% 7.9%
By land 53.9% 55.2% 56.0% 57.4% 57.4%

Outer Harbour 24.1% 23.4% 22.8% 21.1% 21.0%

Inner Harbour 1.7% 1.5% 1.0% 0.0% 0.0%
Taipa Ferry Terminal 13.6% 13.5% 13.3% 13.7% 13.2%
By sea 39.4% 38.3% 37.2% 34.8% 34.2%

Airport 6.5% 6.4% 6.8% 7.8% 8.4%

Heliport (Outer Harbour) 0.1% 0.1% 0.0% 0.0% 0.0%
By air 6.6% 6.5% 6.8% 7.8% 8.4%
Source: Government of Macao Special Administrative Region Statistics and Census Service.

The number of air passenger arrivals increased by 12.7% YoY during the first ten months of 2017, indicating that the
quality of visitors is improving. From Jan. through Oct. 2017, the number of Macau's arrivals at the airport increased 12.7%
Sector Report

YoY. After decreasing by 32.9% in 2016, the number of helicopter visitor arrivals to Macau surged by 51.4% YoY for the first
ten months of 2017, coinciding with the high growth in VIP GGR.

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 Gaming Sector

Figure-24: Macau Visitor Arrivals by Modality YoY Growth Figure-25: Macau Air Visitors arrivals YoY Growth

Sea Land Air Heliport Airport

20% 17.8% 120%

15.8% 14.6% 13.8% 14.5% 93.7%
15% 10.9%

21 December 2017
80% 37.3%
8.7% 40.3%
10%
2.8% 40% 18.1%
5% 0.9% 3.4% 16.2%15.0% 13.9% 10.6%
1.4%
0% 0%
8.6% 14.4%
-5% -43.7% -46.0% -6.0%
-40%
-10% -31.3%
-50.4% -45.8%
-80%
-15%

Source: Gaming Inspection and Coordination Bureau Macao SAR, Macao Source: Government of Macao Special Administrative Region Statistics and
Special Administrative Region Statistics and Census Service. Census Service.

During January through October 2017, the number of overnight visitors to Macau increased by 10.4% YoY. During the
same time period, the average duration of stay of all Macau visitors increased by 3.4% YoY to 1.2 days, while the number of
day-trippers decreased by 1.2%. More overnight visitors is good news for the sector as overnight visitors spend more than
visitors to Macau for day trips.

Figure-26: Macau Visitors Average Stay Duration

All Visitors Overnight Visitors
Same-day Visitors
2.5 2.2 2.2 2.2 2.2
2.1 2.1 2.1 2.1
2.0

1.5 1.2 1.2 1.3 1.3 1.2 1.3 1.3 1.2

1.0

0.5 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2

0.0

Gaming Sector 博彩行业

Source: Gaming Inspection and Coordination Bureau Macao SAR, Macao Special Administrative Region Statistics and Census Service.

Figure-27: Macau Proportion of Same Day Vs. Overnight Figure-28: Macau Same Day Vs. Overnight Visitors YoY
Visitors Growth
Same-day Visitors Overnight Visitors Same-day Visitors Overnight Visitors
100% 20% 17.7%
13.9% 14.2%
15% 10.1% 10.6%
80%
53.4% 53.5% 55.2% 55.6% 10% 7.3%
54.0% 50.9% 4.8% 5.4%
60% 52.5% 56.7% 4.4%
5% 8.4%
-1.0%
0% -2.4%
40%
-5% -9.1% -2.3%
20% 46.6% 46.5% 44.8% 44.4%
49.1% -10% -6.1% -6.2%
46.0%
47.5% 43.3% -15%
0%

Source: Government of Macao Special Administrative Region Statistics and Source: Gaming Inspection and Coordination Bureau Macao SAR, Macao
Census Service. Special Administrative Region Statistics and Census Service.
Sector Report

See the last page for disclaimer Page 14 of 19

 Gaming Sector

Investment Suggestions

We recommend to "Buy" Melco Resorts & Entertainment (MLCO US), which is our sector top pick, as well as Wynn Macau
(01128 HK). We have "Accumulate" ratings for MGM China (02282 HK) and Sands China (01928 HK) and we are "Neutral" on Galaxy

21 December 2017
Entertainment (00027 HK).

Figure-29: Macau Gaming Peers Index, 5-Year Forward Figure-30: Macau Gaming Peers Index, 5-Year Forward
PE EV/Adjusted EBITDA
BEst P/E Ratio (Next 4 Quarters) EV to BEst EBITDA (Next 4 Quarters)
Mean Mean
30 +1 ST. DEV. 20 +1 ST. DEV.
-1 ST. DEV. -1 ST. DEV.
18
25
16

14
20
12

15 10

8
10 6
Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17
Source: Bloomberg, Guotai Junan International. Source: Bloomberg, Guotai Junan International.

Our sector top pick is Melco Resorts & Entertainment (MLCO US), which we have a "Buy" investment rating with target price of
US$28.60. Our target price is equivalent to 12.4x 2017 and 10.7x 2018 EV/Adjusted EBITDA, 35.9x 2017 and 27.2x 2018 PER and is a
19.1% discount to our DCF derived NAV per share of US$35.37. We expect adjusted property EBITDA margin to increase in 2017 as Melco
gains operating efficiency and controls operating costs at Studio City (Macau) and City of Dreams Manila, both of which were still in their
ramp-up phases for part of 2016.

"Buy" investment rating for Wynn Macau (01128 HK) with target price of HK$26.00. With an undemanding valuation and expected
margin improvement at Wynn Palace, we think Wynn Macau is a "Buy". Our target price is equivalent to 13.9x 2018 EV/adjusted EBITDA and
24.8x 2018 PER; it is a 19.0% discount to our DCF derived NAV per share of HK$32.10. We expect that Wynn Macau's overall EBITDA
margin will continue to decline in 2017 due to Wynn Palace being in its ramp-up phase for most of the year, when revenue contribution will be

Gaming Sector 博彩行业

catching up with full operating expenses. However, we expect EBITDA margin to increase in 2018 as Wynn Palace will be fully ramped up by
then and will be making a more significant contribution to revenue and earnings. Once Wynn Palace is finished ramping up, we expect it to
have a higher-than-sector average EBITDA margin as it attracts the more profitable premium mass market gamers.

"Accumulate" MGM China (02282 HK) with target price of HK$22.00. With the second lowest valuation among Macau peers, we think
MGM China is being discounted too much by the market. Our target price is equivalent to 16.0x forward (next four quarters) EV/Adjusted
EBITDA and is equivalent to 27.9x forward PER. Our target price is a 19.9% discount to our DCF derived NAV per share of HK$27.45. For the
remainder of 2017, we expect MGM China's net revenue to grow slower than the sector growth rate as it loses market share to the newly
opened Wynn Palace and the Parisian Macao. However, in 2018 we expect the MGM China's net revenue to increase as the then newly
opened MGM Cotai will double MGM China's footprint in Macau.

"Accumulate" Sands China (01928 HK) with target price of HK$45.00. Our target price is equivalent to 16.2x 2017 EV/Adjusted EBITDA
and 27.2x / 2017 PER and is a 20.0% discount to our DCF derived NAV per share of HK$56.22. Although we think Sands China's valuation is
not very attractive, we like Sands China's high dividend yield, mass market focus and relatively diversified revenue streams.

We are "Neutral" on Galaxy Entertainment (00027 HK) with target price of HK$56.00. Galaxy Entertainment's current valuation is not
demanding, in our view. However, we give Galaxy Entertainment a "Neutral" investment rating since we think that with no new casinos under
development, GEG's performance faces more downside risk than upside. Our new target price is equivalent to 15.7x 2017 EV/Adjusted
EBITDA, is equivalent to 26.2x 2017 PER, and is a 17.5% discount to our DCF derived NAV per share of HK$67.91. Although we expect that
Sector Report

Macau's 2017 GGR will grow at a percentage in the upper-teens, we expect that Galaxy Entertainment's net revenue will grow at a slower rate
as it loses market share to Wynn Palace and the Parisian Macao, which will both be ramping up for nearly the whole year in 2017. With no
new projects or revenue streams in sight for GEG, we expect it to continue to lose market share in 2018 when the then newly opened
competitor MGM Cotai will be open and ramping up.

See the last page for disclaimer Page 15 of 19

 Gaming Sector

Table-10: Gaming Sector Peers Comparison

Company Stock Crncy Price M-Cap PE EV/ Adjusted EBITDA PB ROE Yield
Code (mn) Bn Hist. Current Hist. Current 17F 17F 17F
(HK$) Fwd Fwd 17F 18F Fwd Fwd 17F 18F (%) (%)
Macau Operators

21 December 2017
Galaxy Entertain 00027 HK HKD 63.100 271.8 22.7 28.8 28.8 25.2 13.4 18.9 18.9 16.4 5.2 18.4 1.2
Melco Int. Dev. 00200 HK HKD 23.800 36.6 26.2 25.0 25.0 18.9 151.2 9.7 9.7 8.4 1.6 6.5 0.3
Melco Resorts & Ent. MLCO US USD 28.470 109.6 32.7 27.3 31.6 27.1 11.0 12.2 12.8 11.3 4.7 12.0 1.4
Mgm China 02282 HK HKD 24.000 91.3 22.6 38.0 38.0 33.5 15.5 26.1 26.1 18.1 10.8 29.7 1.7
Sands China Ltd 01928 HK HKD 40.250 325.0 21.8 23.4 26.9 22.9 16.6 18.3 18.3 16.5 9.1 32.3 5.2
Sjm Holdings Ltd 00880 HK HKD 7.030 39.8 18.0 22.6 22.6 23.0 9.6 13.5 13.5 14.3 1.6 7.1 2.5
Wynn Macau Ltd 01128 HK HKD 24.750 128.6 21.7 26.6 33.8 24.5 15.0 19.1 19.1 16.1 44.9 141.1 3.7
Simple Average 23.7 27.4 29.5 25.0 33.2 16.8 16.9 14.4 11.1 35.3 2.3
Weighted Average 23.3 27.1 29.6 25.0 19.4 18.1 18.2 15.6 11.7 38.1 2.9

USA Operators
Las Vegas Sands LVS US USD 70.760 437.6 20.3 23.4 24.6 23.2 12.6 14.0 14.2 14.1 9.3 35.2 4.3
Mgm Resorts Inte MGM US USD 33.160 146.9 25.3 25.6 29.5 22.3 11.2 11.9 12.3 10.8 3.2 9.4 1.4
Penn Natl Gaming PENN US USD 30.900 22.0 18.7 24.3 45.4 24.8 7.1 8.1 8.6 7.9 (88.8) (119.3) n.a.
Pinnacle Enterta PNK US USD 32.160 14.5 31.4 28.8 39.8 27.0 6.9 7.8 8.0 7.5 (5.3) (14.4) n.a.
Wynn Resorts Ltd WYNN US USD 168.950 135.9 25.1 27.7 32.6 25.1 13.3 14.2 14.9 13.7 35.0 132.3 1.3
Simple Average 24.2 26.0 34.4 24.5 10.2 11.2 11.6 10.8 (9.3) 8.6 2.3
Weighted Average 20.7 23.6 25.1 23.3 12.5 13.8 14.0 13.9 8.8 33.6 4.2

Other Operators
Genting Singapor GENS SP SGD 1.330 93.0 21.9 18.0 24.2 21.1 10.8 13.1 13.1 12.2 2.1 8.4 2.3
Genting Malaysia GENM MK MYR 5.580 60.6 18.9 26.0 26.0 19.0 10.7 14.0 14.0 10.6 1.6 5.9 1.8
Bloomberry Res BLOOM PM PHP 10.800 18.5 32.8 15.4 18.2 15.2 8.8 9.8 9.8 8.2 3.9 24.7 1.0
Belle Corp BEL PM PHP 3.820 6.2 15.8 12.3 12.3 9.8 13.1 12.9 12.9 8.8 1.5 12.1 2.6
Simple Average 22.3 17.9 20.2 16.3 10.9 12.4 12.4 10.0 2.3 12.8 1.9
Weighted Average 32.8 15.4 18.2 15.2 8.8 9.8 9.8 8.2 3.9 24.7 1.0
Source: Bloomberg, Guotai Junan International.
Note: Forward valuations are calculated based on next 12 months earnings forecasts.

Gaming Sector 博彩行业

Sector Report

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 Gaming Sector

Appendix

Adjusted Property EBITDA Margins

2015 2016 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
Galaxy Ent. (00027 HK) 17.1% 19.6% 18.2% 18.7% 20.7% 20.6% 22.6% 22.7% 22.1%

21 December 2017
Melco Resorts Ent. (MLCO US) 22.1% 20.5% 20.0% 19.5% 21.2% 21.3% 22.9% 23.8% 27.9%
MGM China (02282 HK) 24.4% 27.1% 24.3% 26.4% 30.0% 27.5% 28.5% 25.9% 25.1%
SJM (00880 HK) 7.5% 7.7% 7.0% 7.4% 7.5% 8.7% 7.5% 6.6% 7.2%
Sands China (01928 HK) 32.6% 31.2% 31.9% 33.2% 36.7% 32.3% 32.7% 32.7% 33.5%
Wynn Macau (01128 HK) 28.8% 27.6% 31.4% 29.8% 25.9% 24.7% 27.6% 23.8% 27.9%
Macau Avg. 21.0% 21.6% 20.9% 21.5% 23.3% 22.4% 23.5% 23.3% 24.4%
Source: the Companies.
Gaming Revenue Market Share
2015 2016 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
Galaxy Ent. (00027 HK) 25.6% 26.5% 27.7% 26.2% 25.8% 26.2% 24.5% 23.8% 25.5%
Melco Resorts Ent. (MLCO US) 13.6% 13.8% 14.0% 15.5% 13.9% 12.1% 13.3% 17.2% 17.3%
MGM China (02282 HK) 10.6% 8.7% 8.6% 8.9% 8.8% 8.6% 7.5% 6.8% 6.7%
SJM (00880 HK) 22.5% 20.2% 21.8% 20.4% 18.8% 19.7% 17.8% 17.0% 14.8%
Sands China (01928 HK) 16.2% 15.5% 16.5% 12.7% 16.6% 16.1% 15.4% 13.3% 14.6%
Wynn Macau (01128 HK) 11.6% 15.3% 11.4% 16.3% 16.1% 17.3% 21.6% 21.9% 21.1%
VIP 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Galaxy Ent. (00027 HK) 16.5% 18.7% 18.4% 18.5% 18.8% 19.0% 18.6% 19.2% 19.5%
Melco Resorts Ent. (MLCO US) 14.7% 16.9% 16.9% 16.8% 16.7% 17.2% 15.8% 15.1% 15.5%
MGM China (02282 HK) 7.8% 7.4% 7.4% 7.7% 7.9% 6.9% 7.5% 6.6% 6.4%
SJM (00880 HK) 23.0% 19.6% 20.6% 20.7% 20.1% 17.4% 18.1% 17.4% 17.4%
Sands China (01928 HK) 30.4% 29.1% 29.1% 28.8% 28.9% 29.5% 29.8% 30.9% 30.1%
Wynn Macau (01128 HK) 7.6% 8.2% 7.7% 7.5% 7.5% 10.0% 10.3% 10.9% 11.1%
Mass Market Tables 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Galaxy Ent. (00027 HK) 15.2% 17.2% 15.4% 18.6% 18.9% 17.7% 17.8% 17.6% 18.9%
Melco Resorts Ent. (MLCO US) 11.5% 10.5% 10.3% 9.8% 10.3% 11.6% 9.8% 10.6% 8.7%
MGM China (02282 HK) 14.1% 11.8% 12.0% 12.0% 11.4% 12.2% 12.2% 11.5% 12.9%
SJM (00880 HK) 36.3% 39.8% 37.6% 38.9% 40.2% 39.8% 40.2% 39.5% 40.6%
Sands China (01928 HK) 10.0% 10.0% 10.0% 10.6% 10.4% 9.4% 9.2% 9.6% 9.0%
Wynn Macau (01128 HK) 13.0% 10.6% 14.7% 10.1% 8.7% 9.2% 10.7% 11.2% 9.9%
Slots 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Gaming Sector 博彩行业

Galaxy Ent. (00027 HK) 23.1% 24.4% 24.9% 24.3% 23.9% 24.5% 23.3% 23.7% 24.9%
Melco Resorts Ent. (MLCO US) 12.8% 13.9% 13.9% 14.2% 14.0% 13.3% 13.9% 14.2% 14.6%
MGM China (02282 HK) 8.4% 7.5% 7.3% 7.7% 7.9% 7.2% 7.0% 6.4% 6.3%
SJM (00880 HK) 24.3% 21.3% 22.7% 22.0% 20.7% 19.9% 19.1% 18.5% 17.4%
Sands China (01928 HK) 22.5% 22.3% 22.0% 21.3% 23.2% 22.6% 22.6% 22.3% 22.1%
Wynn Macau (01128 HK) 8.9% 10.6% 9.1% 10.6% 10.2% 12.4% 14.1% 14.9% 14.7%
Casino Revenue 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Source: the Companies.

Casino Revenue (HK$ mn)

2015 2016 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
Galaxy Ent. (00027 HK) 28,444 26,177 7,117 5,880 6,036 7,144 6,816 6,932 8,146
Melco Resorts Ent. (MLCO US) 15,148 13,640 3,592 3,492 3,255 3,302 3,694 4,991 5,511
MGM China (02282 HK) 11,737 8,631 2,222 2,005 2,058 2,347 2,073 1,963 2,141
SJM (00880 HK) 25,064 19,934 5,604 4,578 4,393 5,359 4,936 4,937 4,736
Sands China (01928 HK) 17,963 15,344 4,234 2,858 3,876 4,377 4,272 3,869 4,654
Wynn Macau (01128 HK) 12,867 15,092 2,944 3,655 3,766 4,725 6,004 6,375 6,727
VIP Casino Table Win 111,223 98,818 25,713 22,469 23,383 27,254 27,794 29,067 31,916

Galaxy Ent. (00027 HK) 16,030 19,289 4,593 4,509 4,976 5,211 5,334 5,335 5,642
Melco Resorts Ent. (MLCO US) 14,304 17,438 4,211 4,074 4,423 4,719 4,539 4,197 4,488
MGM China (02282 HK) 7,557 7,689 1,847 1,863 2,098 1,882 2,157 1,824 1,861
SJM (00880 HK) 22,386 20,273 5,146 5,034 5,317 4,776 5,196 4,841 5,036
Sector Report

Sands China (01928 HK) 29,580 30,053 7,263 7,005 7,639 8,106 8,553 8,605 8,723
Wynn Macau (01128 HK) 7,376 8,484 1,924 1,825 1,991 2,743 2,953 3,039 3,210
Mass Casino Table Win 97,234 103,226 24,985 24,310 26,444 27,436 28,732 27,842 28,959

Galaxy Ent. (00027 HK) 1,741 1,835 412 474 494 485 496 483 529

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 Gaming Sector

Melco Resorts Ent. (MLCO US) 1,310 1,114 276 251 269 318 274 292 245
MGM China (02282 HK) 1,612 1,257 321 307 296 334 340 315 361
SJM (00880 HK) 1,139 1,065 267 270 272 256 257 263 251
Sands China (01928 HK) 4,154 4,235 1,007 992 1,049 1,088 1,121 1,086 1,138
Wynn Macau (01128 HK) 1,483 1,132 392 258 227 253 300 308 278
Slots 11,438 10,639 2,675 2,553 2,607 2,733 2,787 2,747 2,801

21 December 2017
Galaxy Ent. (00027 HK) 46,195 47,332 12,123 10,865 11,507 12,842 12,647 12,777 14,346
Melco Resorts Ent. (MLCO US) 25,552 26,857 6,767 6,362 6,747 6,981 7,575 7,665 8,439
MGM China (02282 HK) 16,842 14,606 3,569 3,443 3,808 3,786 3,832 3,428 3,610
SJM (00880 HK) 48,590 41,273 11,019 9,865 9,992 10,397 10,389 9,986 10,015
Sands China (01928 HK) 44,973 43,260 10,719 9,526 11,177 11,837 12,270 11,984 12,762
Wynn Macau (01128 HK) 17,887 20,553 4,445 4,732 4,926 6,505 7,644 7,997 8,457
Casino Revenue 200,038 193,880 48,642 44,793 48,157 52,348 54,356 53,837 57,629
Source: the Companies.

Gaming Table Share

2015 2016 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
Galaxy Ent. (00027 HK) 15.3% 18.2% 19.2% 18.4% 13.7% 18.3% 18.7% 18.4% 19.7%
Melco Resorts Ent. (MLCO US) 14.1% 14.0% 14.3% 14.5% 13.5% 13.8% 13.6% 13.6% 13.5%
MGM China (02282 HK) 7.2% 6.7% 6.9% 6.9% 6.5% 6.6% 6.5% 6.5% 6.4%
SJM (00880 HK) 29.5% 26.6% 27.4% 27.7% 25.9% 26.1% 26.3% 26.3% 25.7%
Sands China (01928 HK) 26.1% 23.2% 25.1% 25.4% 29.4% 25.9% 25.6% 25.7% 25.3%
Wynn Macau (01128 HK) 7.9% 11.2% 7.1% 7.0% 10.9% 9.3% 9.2% 9.5% 9.4%
Macau Gaming 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Source: the Companies.

Number of Gaming Tables

2015 2016 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
Galaxy Ent. (00027 HK) 890 1,123 1,166 1,105 865 1,151 1,198 1,179 1,270
Melco Resorts Ent. (MLCO US) 819 866 873 869 851 868 876 875 868
MGM China (02282 HK) 421 416 421 416 409 416 420 415 415
SJM (00880 HK) 1,718 1,642 1,667 1,662 1,634 1,642 1,690 1,688 1,658
Sands China (01928 HK) 1,518 1,431 1,525 1,525 1,856 1,626 1,646 1,646 1,629
Wynn Macau (01128 HK) 458 691 435 421 689 584 593 610 609
Total 5,824 6,169 6,087 5,998 6,304 6,287 6,423 6,413 6,449
Source: the Companies.

Slot Machines Share

Gaming Sector 博彩行业

2015 2016 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
Galaxy Ent. (00027 HK) 23.1% 28.5% 23.9% 22.1% 34.8% 30.1% 41.6% 36.9% 38.6%
Melco Resorts Ent. (MLCO US) 8.6% 7.6% 7.9% 8.1% 7.0% 7.4% 5.6% 5.0% 4.5%
MGM China (02282 HK) 8.4% 7.4% 8.3% 7.5% 6.5% 7.2% 6.3% 6.4% 6.4%
SJM (00880 HK) 19.5% 18.9% 20.3% 20.6% 17.4% 19.7% 15.9% 17.4% 16.1%
Sands China (01928 HK) 35.3% 32.1% 34.1% 36.0% 29.2% 29.5% 25.1% 28.6% 28.8%
Wynn Macau (01128 HK) 5.1% 5.6% 5.5% 5.7% 5.1% 6.1% 5.5% 5.7% 5.6%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Source: the Companies.

Number of Slot Machines

2015 2016 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
Galaxy Ent. (00027 HK) 3,216 4,107 3,424 3,034 5,490 4,160 6,658 5,978 6,292
Melco Resorts Ent. (MLCO US) 1,202 1,091 1,134 1,115 1,098 1,018 895 818 734
MGM China (02282 HK) 1,174 1,060 1,183 1,024 1,032 1,002 1,016 1,033 1,040
SJM (00880 HK) 2,711 2,718 2,898 2,820 2,748 2,718 2,549 2,819 2,632
Sands China (01928 HK) 4,907 4,622 4,877 4,938 4,597 4,083 4,014 4,639 4,694
Wynn Macau (01128 HK) 708 802 781 775 804 845 886 917 918
Total 13,918 14,400 14,297 13,706 15,769 13,826 16,018 16,204 16,310
Source: the Companies.
Sector Report

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 Gaming Sector

Company Rating Definition

The Benchmarks: Hong Kong Hang Seng Index and NASDAQ Composite Index
Time Horizon: 6 to 18 months
Rating Definition
Buy Relative Performance >15%;

21 December 2017
or the fundamental outlook of the company or sector is favorable.
Accumulate Relative Performance is 5% to 15%;
or the fundamental outlook of the company or sector is favorable.
Neutral Relative Performance is -5% to 5%;
or the fundamental outlook of the company or sector is neutral.
Reduce Relative Performance is -5% to -15%;
or the fundamental outlook of the company or sector is unfavorable.
Sell Relative Performance <-15%;
or the fundamental outlook of the company or sector is unfavorable.

Sector Rating Definition

The Benchmark: Hong Kong Hang Seng Index and NASDAQ Composite Index
Time Horizon: 6 to 18 months
Rating Definition
Outperform Relative Performance >5%;
or the fundamental outlook of the sector is favorable.
Neutral Relative Performance is -5% to 5%;
or the fundamental outlook of the sector is neutral.
Underperform Relative Performance <-5%;
or the fundamental outlook of the sector is unfavorable.

DISCLOSURE OF INTERESTS

(1) Except for Shenzhen International Holdings Limited (00152 HK), the Analysts and their associates do not serve as an officer of the issuer
mentioned in this Research Report.
(2) The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report.
(3) Except for GREENLAND BROAD (01253 HK),GUOTAI JUNAN INTERNATIONAL (01788 HK),BINHAI INVESTMENT (02886 HK),GFI
MSCI A I (03156 HK),CAM SCSMALLCAP (03157 HK),LINK HOLDINGS (08237 HK),GFI MSCI A I-R (CNY) (83156 HK),Guotai Junan
and its group companies do not hold equal to or more than 1% of the market capitalization of the issuer mentioned in this Research
Report.
(4) Guotai Junan and its group companies have not had investment banking relationships with the issuers mentioned in this Research
Report within the preceding 12 months.
(5) Guotai Junan and its group companies are not making a market in the securities mentioned in this Research Report.
(6) Guotai Junan and its group companies have not employed an individual serving as an officer of any issuers mentioned in this Research

Gaming Sector 博彩行业

Report. There is no officer of any issuers mentioned in this Research Report associated with Guotai Junan and its group companies.

DISCLAIMER

This Research Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by Guotai Junan Securities
(Hong Kong) Limited ("Guotai Junan"). Guotai Junan and its group companies may do business that relates to companies covered in
research reports, including investment banking, investment services, etc. (for example, the placing agent, lead manager, sponsor, underwriter
or invest proprietarily).

Any opinions expressed in this report may differ or be contrary to opinions or investment strategies expressed orally or in written form by sales
persons, dealers and other professional executives of Guotai Junan group of companies. Any opinions expressed in this report may differ or
be contrary to opinions or investment decisions made by the asset management and investment banking groups of Guotai Junan.

Though best effort has been made to ensure the accuracy of the information and data contained in this Research Report, Guotai Junan does
not guarantee the accuracy and completeness of the information and data herein. This Research Report may contain some forward-looking
estimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and
mutable situation, so uncertainty may contain. Investors should understand and comprehend the investment objectives and its related risks,
and where necessary consult their own financial advisers prior to any investment decision.

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Sector Report

See the last page for disclaimer Page 19 of 19