JP Morgan Delayed Macau Gaming Time To Invest I 1

15 Nov 2016 04:15 AM HKT
This document is being provided for the exclusive use of AKBAR HAKIM HARUN Completed
at NANYANG
Disseminated
15 Nov 2016 04:57 AM HKT
TECHNOLOGICAL UNIVERSITY
Asia Pacific Equity Research
15 November 2016
Macau Gaming
Time to Invest into Industry Upturn for Years Ahead
We are turning outright bullish on the sector, as we believe these stocks are
transitioning back to investments from trading vehicles in the recent past. From a
big picture standpoint, we think the industry is entering genuine upturns in
demand, profits and cash flow, following two-plus years of downturns. This
should allow investors to enjoy predictable returns amidst sizable earnings
upgrades. Medium-term valuations look attractive too we think, at 11x EBITDA
and 8% FCF yield on 2018E. Top picks: Wynn & Galaxy.
Disconnect between reality and sentiment. After turning around in August,
GGR growth has accelerated every month to 9%+ in October and has
consistently beaten estimates. This had already caused the Street to revise up
expectations into 3Q earnings, but actual results still beat estimates for five of
six operators, with stronger mix and cost controls. Despite a series of positive
surprises, consensus estimates remained surprisingly unchanged, with FY17E
EBITDA up only 3% from trough, even smaller than the scale of beats. That is
to say that the Street is stubbornly skeptical about the sustainability of a
recovery (this is also echoed by many buy siders), because, in our view, the
market is so jaded from protracted downturns that it is not seeing emerging
upturns. We beg to differ, and anticipate upcycles in demand/profit to stay
higher for longer.
Three simple pieces of evidence for genuine, sustainable recovery. First,
consecutive beats/misses are typical phenomena at an inflection point in the
cycle, as trajectory of momentum is stronger than seasonality; four consecutive
months of GGR beats are very telling, we think. Second, improvements are very
broad-based across segments (VIP, premium mass, mass, slot) and across
properties (even those in peninsula), indicating this is a market-wide recovery in
end-demand, not a short-term blip from new openings or luck. Third, we see
telltale signs of sustainable recovery for each segment. Quality improvement in
visitors has been robust since 2H15 with new openings underpinning
structural aspects of mass. For VIP and prem mass, many junkets & marketing
hosts seem positively surprised recently that player confidence is coming back,
with quite a few dormant players returning to tables.
Hong Kong
Regional Gaming and Lodging
DS Kim
AC
(852) 2800-8597
ds.kim@jpmorgan.com
Bloomberg JPMA DSKIM <GO>
Sean Zhuang
(852) 2800-8512
sean.zhuang@jpmorgan.com
J.P. Morgan Securities (Asia Pacific) Limited
Table 1: JPM ratings & PTs
Wynn
Div yld
Rating PT Upside (FY17E)
OW 14.5
25% 5.2%
Galaxy
OW 39.0
19%
1.5%
MGM
OW 17.0
16%
1.3%
Sands
OW 39.0
13%
5.8%
Melco
N 11.5
10%
3.0%
SJM
7%
3.9%
5.8
Source: J.P. Morgan.
The numbers. We estimate GGR to grow +9%/+6% in FY17/18 (vs. -4% in

FY16E), leading us to forecast a substantial 31% expansion in industry EBITDA
in the next two years on mix improvement and operating leverage. Our FY17E18E EBITDA are 10~12% above consensus. If our numbers prove to be correct,
the stocks will likely rally as such major revisions would entail multiple reratings too.
Our thoughts on valuation. The sector trades at 13x FY17E EV/EBITDA,
which may not be cheap enough for some, as its just below the mean at 14x.
But we think one should look beyond current valuations at this inflection point
of the industry cycle, as we believe the market will increasingly focus on
medium-term dynamics under a steady state (i.e., fully normalized demand &
capex), on which the stocks look attractive at 11x on FY18E or 9x FY19E.
Adding to our conviction is the sectors robust recurring FCF yields, at 8-10%
on FY17E-19E.
Time to make a directional call for long-term investment. We would not try
to time a better entry point, as the industrys big cycle has already turned the
corner. We see upside across the board, but prefer those with company-specific
positives. Our pecking order: Wynn>Galaxy>MGM>Sands>Melco>SJM.
See page 58 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan 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.
www.jpmorganmarkets.com
This document is being provided for the exclusive use of AKBAR HAKIM HARUN at NANYANG
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com

15 November 2016
Sean Zhuang
(852) 2800-8512
Equity Ratings and Price Targets

Company
Wynn Macau
Galaxy Entertainment
MGM China
Sands China
Melco International
SJM Holdings
Ticker
1128 HK
27 HK
2282 HK
1928 HK
200 HK
880 HK
Mkt Cap
($ mn)
7,733.97
18,021.45
7,209.74
35,936.02
2,081.25
3,966.20
Price
CCY
HKD
HKD
HKD
HKD
HKD
HKD
Rating
Price
11.58
32.80
14.72
34.55
10.44
5.44
Cur
OW
OW
OW
OW
N
N
Prev
n/c
n/c
n/c
n/c
n/c
n/c
Price Target
Cur
Prev
14.50
13.50
39.00
37.00
17.00
16.50
39.00
38.00
11.50
8.50
5.80
n/c
Source: Company data, Bloomberg, J.P. Morgan estimates. n/c = no change. All prices as of 14 Nov 16.
Investment Thesis
Figure 1: We see sizable >10% upside to consensus EBITDA amidst a genuine industry upturn
(US$ b)
100.0
90.0
(US$ b)
7.5
JPMe: $7.1b for FY17E
7.0
80.0
6.5
70.0
6.0
60.0
5.5
50.0
5.0
Macau: aggregated market cap (LHS)
Oct-16
Jul-16
Apr-16
Jan-16
FY16 consensus EBITDA (LHS)
FY17 (LHS)
Source: J.P. Morgan estimates, Bloomberg.
Following our recent rating upgrades during 3Q16 results, our sector view goes
outright bullish too. We see these stocks transitioning back to investments that can
generate medium-term returns, from trading vehicles of the recent past. From a big
picture standpoint, we believe the industry is finally entering a genuine upturn in
demand, profit and cash flows, following two-plus years of downturns.
Big industry cycle has already
turned the corner, in our view.
Gaming demand has been beating expectations for four consecutive months already,
with discernible improvements across all segments including VIP. Meanwhile, recent
3Q16 results demonstrated that the sectors earnings power is much stronger than
what the market had projected, driven by a benign cost environment despite new
openings, as well as benefits from stronger mix and operating leverage. Whats most
interesting to us, however, was that consensus estimates stayed largely unchanged
despite all these positives & beats, with consensus FY17E EBITDA up only 3% from
the trough (this is even smaller than the scale of beats themselves).
But, the market seems to still be

skeptical about a sustainable
recovery.
Quite simply, the markets expectations appear too low to us, as many analysts and
investors still doubt and debate about the sustainability of a recovery, despite clear
signs that the industrys big cyclical downturn is already over. We think the market
sentiment is still in the stage of disbelief, probably because many are too jaded
from a protracted downturn to see an upturn.
We see a good possibility of

sustainable beats against
market expectations, in turn
driving stocks higher for longer.
Recall, this is a rather typical phenomenon at the inflection point of the industry
cycle, similar to consecutive misses that weve seen from mid-2014 at the beginning
of a big downturn. We expect gaming demand and earnings to continue to beat
expectations for a while, amidst strong and sustainable recovery into 4Q16/2017.
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com

15 November 2016
Sean Zhuang
(852) 2800-8512
Our industry EBITDA estimates are 10-12% above consensus for FY17-18; if our
numbers prove to be correct, these stocks can rally higher for longer, because such
major revisions will also entail multiple re-rating we think.
Adding to our conviction are
attractive medium-term valuations,
as well as strong FCF yields.
We acknowledge that many investors are concerned about valuation levels, and
indeed, the sectors current valuation may not look cheap enough at 13x 2017E
EV/EBITDA (vs. historical average of 14x). However, we argue that one should look
beyond near-term valuations in this upturn in demand/earnings, as the market will
increasingly focus on medium-term cash flows under steady-state industry dynamics
(i.e., fully normalized demand & capex profile). We feel very comfortable about the
sectors valuation levels here, as the multiples will have to drop sharply amidst
significant profit upcycle (we project industry EBITDA to grow 45% over the next
three years) and CAPEX downcycle (we project capex to drop c70% in the next three
years). The sectors medium-term valuation looks attractive to us at 11x
EV/EBITDA on FY18E or 9x on FY19E, so are its recurring FCF yields, at average
8-10% for FY17-19E.
Figure 2: Macaus FCFs will be unlocked from rising EBITDA & falling CAPEX
(US$ b)
10.0
+30%
+1%
8.0
+69%
6.0
4.0
-37%
+11%
+16%
+4%
-14%
+12%
+11%
-20%
+72%
-52%
2.0
-28%
0.0
2013
2014
2015
Industry EBITDA
2016E
2017E
2018E
2019E
Industry CAPEX
Source: Company reports and J.P. Morgan estimates.
Our beta call: buy now. As the industrys big cycle has already turned the corner,
we believe it is time to make a directional call for long-term investments. We would
not try to time a better entry point, which we think is virtually impossible anyways
for this cyclical sector.
Wynn Macau and Galaxy
Entertainment are our top picks.
Our alpha calls: A rising tide lifts all boats. Though we see upside to all Macau
names, we obviously prefer those with visible company-specific positives. Our top
picks are Wynn Macau (a combo of strong profit growths & 5% dividend yield, and
appealing medium-term valuation) and Galaxy Entertainment (the lowest downside
risks all around, to its valuation, estimates, or execution). Meanwhile, we have OWs
on MGM China (best-in-class execution + strong profit growth) and Sands China
(robust business mix with non-VIP driving c95% of EBITDA + ~6% dividend yield).
We rate Melco Intl and SJM Holdings as Neutral, which is because of our relative
stock preferences and likely smaller upside than our OW-rated names.
See Table 3 for a summary of our ratings/PTs, and see individual company pages for
our investment thesis on each stock.
Key risks to our bullish call. There are ongoing risk factors for Macaus demand
outlook, stating the obvious. However, most of these risks appear to be rather
3
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
external than the sectors own, namely RMB depreciation, potential capital controls
by the Chinese government, a potential collapse in property price in China, etc.
Therefore, we think it is unwise to disregard the sectors fundamental attractiveness
because of potential external risks, unless the contagion of these macro issues
becomes obvious and imminent to Macaus demand (which is not the case now, in
our view).
Table 2: Macau gaming: industry GGR and EBITDA forecasts
(US$ b)
GGR
YoY
QoQ
2014 1Q15 2Q15 3Q15 4Q15

44.0
8.1
7.1
6.8
6.9
(3%) (37%) (37%) (34%) (27%)
(14% ) (12% ) (4% )
1%
VIP
YoY
QoQ
26.3
4.3
3.6
3.3
3.2
(12%) (47% ) (47% ) (44% ) (41% )
(21% ) (15% ) (11% ) (1% )
Mass tables
YoY
QoQ
15.6
3.4
3.0
3.1
3.2
17% (17% ) (24% ) (22% ) (10% )
(5% ) (10% )
2%
3%
Slots & ETG

YoY
QoQ
2.1
0.4
0.4
0.4
5% (23% ) (17% ) (20% )
(8% )
1%
0%
Luck-adj EBITDA
Margin % on GGR
YoY
QoQ
0.4
(6% )
1%
2015 1Q16 2Q16 3Q16 4Q16E

28.9
7.0
6.5
6.9
7.4
(34%) (13%) (9%)
1%
8%
2% (8% )
7%
7%
2016E 1Q17E 2Q17E 3Q17E 4Q17E

27.7
7.5
7.3
7.5
7.8
(4%)
7% 12%
9%
6%
2% (3% )
3%
5%
2017E
30.1
9%
2018E
32.1
6%
2019E
33.9
6%
14.4
3.3
2.9
(45%) (23% ) (21% )
3% (13% )
3.0
(7% )
5%
3.3
2%
9%
12.5
(13%)
3.3
1%
1%
3.2
11%
(4% )
3.2
5%
0%
3.3
0%
4%
13.0
4%
13.3
2%
13.7
3%
12.8
(18%)
3.3
(3% )
2%
3.2
5%
(3% )
3.4
10%
8%
3.6
13%
6%
13.5
6%
3.7
13%
2%
3.6
13%
(3% )
3.8
11%
6%
4.0
9%
5%
15.1
11%
16.5
10%
17.7
7%
1.7
(17%)
0.4
(1% )
(3% )
0.4
(8% )
(6% )
0.4
(1% )
8%
0.5
5%
7%
1.7
(1%)
0.5
14%
5%
0.5
20%
(1% )
0.5
21%
8%
0.6
22%
8%
2.0
19%
2.3
10%
2.5
10%
9.45 1.63 1.47 1.48 1.52

6.11 1.49 1.42 1.58 1.72
6.21 1.77 1.73 1.81 1.92
7.23
8.11
9.02
21.5% 20.1% 20.7% 21.7% 22.2% 21.1% 21.2% 22.0% 23.0% 23.2% 22.4% 23.5% 23.9% 24.1% 24.4% 24.0% 25.3% 26.6%
2% (40%) (40%) (37%) (23%) (35%) (9%) (3%)
7% 13%
2% 19% 22% 15% 12%
16%
12%
11%
(18% ) (9% )
0%
3%
(2% ) (4% ) 11%
9%
3% (2% )
5%
6%
GGR/day (MOP m)
VIP
Mass & slots
963
575
388
720
382
338
625
319
305
591
282
309
596
279
317
632
315
317
617
291
327
567
252
315
598
262
335
642
286
356
606
273
333
668
296
373
638
279
358
652
276
375
681
287
394
659
284
375
702
291
412
742
300
442
Source: DICJ, Company reports, J.P. Morgan estimates.
Table 3: Macau gaming: Summary of our ratings and price targets (prices as of 14 November 2016)
J.P. Morgan
Company
Rating
Wynn Macau
OW
Galaxy Ent
OW
MGM China
OW
Sands China
OW
Melco Crown
N
SJM Holdings
N
Melco Int'l
N
Price Mkt cap
PT (Local) (US$ b)
14.5 11.6
7.8
39.0 32.8
18.1
17.0 14.7
7.2
39.0 34.6
35.9
17.0 17.0
8.4
5.8
5.4
4.0
11.5 10.4
2.1
Macau average
Share perf (%)

3-mo
-10%
16%
28%
5%
15%
4%
18%
11%
YTD
28%
33%
52%
29%
1%
-1%
-10%
19%
1-yr
9%
29%
33%
22%
-1%
-12%
-12%
10%
EV/EBITDA (x)*
'16E
19.4
13.5
17.5
18.5
11.9
6.4
NA
14.5
'17E
14.5
11.5
15.7
15.3
10.5
10.8
NA
13.0
'18E
11.8
10.8
11.2
13.7
9.6
9.4
NA
11.1
P/E (x)*
'16E
25.1
24.2
18.4
24.0
27.9
12.7
NA
22.0
'17E
30.8
20.2
24.4
20.5
20.1
12.9
NA
21.5
Div yield (%) Recurring FCF yld

'18E
18.7
18.4
22.5
18.0
19.9
19.5
NA
19.5
'17E
5.2%
1.5%
1.3%
5.8%
3.8%
3.9%
3.0%
3.6%
'18E
5.2%
1.6%
2.2%
5.8%
3.8%
3.9%
2.8%
3.7%
'16E
6.0%
7.2%
5.4%
5.7%
7.3%
8.3%
NA
6.6%
'17E
10.0%
7.4%
6.8%
7.1%
8.2%
8.9%
NA
8.1%
EBITDA growth *
'18E '16E '17E '18E

9.2%
5% 30% 20%
7.6% 14% 12% 6%
8.2% -5% 15% 33%
7.0%
1% 21% 10%
8.6% 20% 12% 6%
8.3% -15% 1% 17%
NA
NA NA NA
8.2%
3% 15% 15%
* Note: We used EBITDA & NP before one-offs, such as pre-opening or asset disposal gain/loss (but after any recurring expenses, such as corporate expenses or royalty payment).
Source: J.P. Morgan estimates. Melco Crown is covered by US Gaming Analyst Joseph Greff.
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Three telltale signs of sustainable recovery

#1. This is a market-wide recovery in end demand, finally
Third quarter GGR turned positive yoy for the first time in nine quarters (+1%) and
grew 7% qoq (the highest sequential growth in 11 quarters), nicely beating our and
the markets expectations by ~5%pt. However, what is really encouraging in our
view was that the recovery was very broad-based.
First of all, every segment (VIP, mass table, and slot) showed discernible
improvements from previous quarters, in terms of both yoy % and absolute run-rates
(Figures 3-4). The trend has actually improved during the quarter too, and all three
segments have printed positive yoy growths even VIP in September, the first time
in almost 30 months (Figure 5). It goes without saying that October was even better
for all three segments, printing the best yoy % momentum & absolute run-rates in
over 20 months.
Figure 3: Quarterly GGR - YoY growth by segments
Figure 4: Quarterly GGR run-rate (GGR/day) by segments

(MOP m/day)
800
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
(MOP m/day)
45
700
40
600
500
35
400
30
YoY in VIP
YoY in Mass
YoY in Slot
VIP GGR (LHS)
Source: DICJ, J.P. Morgan estimates.
Mass GGR (LHS)
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
1Q14
25
2Q14
200
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
300
Slot GGR (RHS)
Figure 5: Monthly GGR - YoY growth by segment
YoY in VIP
YoY in Mass
Oct-16
Sep-16
Aug-16
Jul-16
Jun-16
May-16
Apr-16
Mar-16
Jan/Feb 16
Dec-15
Nov-15
Oct-15
Sep-15
Aug-15
Jul-15
Jun-15
May-15
Apr-15
Mar-15
Jan/Feb 15
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
May-14
Apr-14
Mar-14
Jan/Feb 14
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
YoY in Slot
Secondly, even peninsula casinos have started to see some stabilization in revenues,
despite ongoing share losses to new properties in Cotai. GGR from peninsula casinos
as a group was up 1% qoq in 3Q (luck-adjusted), posting the first stabilization in 10
quarters, thanks to decent 4% qoq growth in mass segment (which was also the first
growth in 10 quarters).
5
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Figure 6: Cotai casinos quarterly GGR and YoY growths
Figure 7: Peninsula casinos quarterly GGR and YoY growths
(US$ b)
3.0
40%
30%
2.5
20%
2.0
10%
20%
10%
4.0
0%
3.0
-10%
-10%
2.0
-20%
-20%
1.0
0%
VIP GGR @ Cotai (LHS)

Cotai GGR YoY % (RHS)
Source: J.P. Morgan estimates, Company data.
Mass GGR @ Cotai (LHS)
VIP GGR @ Peninsula (LHS)

Peninsula GGR YoY % (RHS)
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
-50%
2Q14
0.0
1Q14
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
-40%
1Q13
0.0
-40%
4Q13
-30%
3Q13
0.5
-30%
2Q13
1.0
1Q13
1.5
(US$ b)
5.0
Mass GGR @ Peninsula (LHS)
This broad-based recovery as evidenced in yoy %, qoq %, across segments and

across properties indicates that the turnaround is driven by end-demand and
player confidence, not just by seasonality, easier comps, or the operators efforts
(e.g., shifting tables/resources from VIP to mass, more targeted marketing approach,
etc.). We also heard similar feedback from junkets, marketing hosts & casino
operators during our recent Macau trip i.e., end-demand has been tracking higher
from existing players spending as well as new players.
Another good example can be found in strong GGR during recent Golden Week,
which surged >60% from Septembers level to near MOP1bn/day, printing the best
weekly revenues in two years. The week felt almost as good as the good ol days
(Figure 8), which hints that current demand potential could be deeper than one
thinks.
Figure 8: Macau gaming: GGR run-rate (average daily revenues) during 2015-16 YTD
(MOP m/day)
1,000
900
800
700
600
500
400
300
200
100
0
Jan 1-18
Jan 19-31
Feb 1-15
Feb 16-29
'Mar 1-15
Mar 16-31
Apr 1-19
Apr 20-30
May 1-17
May 18-31
Jun 1-14
Jun 15-31
Jul 1-19
Jul 20-31
Aug 1-16
Aug 17-31
Sep 1-13
Sep 14-30
Oct 1-11
Oct 12-18
Oct 19-25
Oct 26-31
Nov 1-15
Nov 16-30
Dec 1-13
Dec 14-31
Jan 1-17
Jan 18-31
Feb 1-14
Feb 15-29
Mar 1-13
Mar 14-31
Apr 1-17
Apr 18-30
May 1-15
May 16-31
Jun 1-19
Jun 20-30
Jul 1-17
Jul 18-31
Aug 1-14
Aug 15-31
Sep 1-18
Sep 19-30
Oct 1-16
Oct 17-31
Oct 1-13
2016
Daily GGR (ADR)

Source: Industry consultants, J.P. Morgan estimates.
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
#2. Mass growth is indeed a structural trend

Figure 9: Mass gaming demand (GGR/day) and YoY growth
(MOP m/day)
500
40%
30%
20%
10%
0%
(10%)
(20%)
(30%)
400
300
200
100
Mass GGR/day (incl. slot; LHS)
Oct 16
Sept 16
Aug 16
Jul 16
Jun 16
May 16
Apr 16
Mar 16
Jan/Feb 16
Dev 15
Nov 15
Oct 15
Sep 15
Aug 15
Jul 15
Jun 15
May 15
Apr 15
Mar 15
Dev 14
Jan/Feb 15
Nov 14
Oct 14
Sep 14
Aug 14
Jul 14
Jun 14
May 14
Apr 14
Mar 14
Jan/Feb 14
YoY % (RHS)
Source: DICJ, Industry consultants, J.P. Morgan estimates.
Figure 10: Macau visitation & YoY
5%
1.5
0%
1.0
(5%)
0.5
(10%)
0.0
(15%)
Jul-16
10%
2.0
Jan-16
2.5
Jul-15
15%
Jan-15
3.0
Jul-14
20%
Jan-14
3.5
Macau visitations (Mn; LHS)

YoY % (RHS)
Source: DSEC
Mass revenue growth has been improving for six quarters, after hitting a bottom in
2Q15, and printed positive growth for seven consecutive months already.
Nonetheless, we consistently hear pushback from investors about the sustainability or
further potential of this growth, mainly because many are concerned about still
sluggish visitor trends (i.e., headline visitation into Macau stayed flat yoy in 3Q as
well as 9M16).
That said, we continue to believe mass turnaround is more of a structural trend than a
blip, based on the following:
Recovery is accompanied by growth in quality visitations. Unlike lackluster
trends in headline visitation, we highlight quality visitors the segments that
actually matter for the gaming industry have shown substantial improvements
for a while. For instance, overnight visitors from China turned around in 4Q15
and have grown over 10% yoy in recent quarters (Figure 11), far outstripping
day-trippers (down c10% yoy); this should improve the length of stay, hence,
spending per visit. Moreover, with regards to visa type, the mix within mainland
visitors also improved sharply toward high-value non-package travelers (e.g.,
those using IVS, transit visa, or business permits), from package tourists who
tend to have little spending power (Figure 12). All of these signals that average
spending per visit should be structurally improving, in our view.
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Figure 11: Chinese into Macau: overnighters vs. day-trippers

(Mn)
3.5
Figure 12: Chinese into Macau: Individual vs. package/group tourists

25%
3.0
15%
2.5
2.0
5%
1.5
(5%)
1.0
(15%)
0.5
0.0
(25%)
(Mn)
4.0
50%
3.0
25%
2.0
0%
1.0
(25%)
0.0
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Overnight visitors (LHS)
Day-trippers (LHS)
Overnight YoY % (RHS)
Day-trippers YoY % (RHS)
(50%)
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Individual travellers (LHS)
Individual travellers YoY (RHS)
Package tourists (RHS)

Package tourists YoY (RHS)
Source: DSEC.
Source: DSEC.
Figure 13: China overnighters show high correlation with mass

GGR
Figure 14: so is the growth in individual travelers from China
50%
50%
60%
50%
40%
25%
25%
25%
0%
0%
20%
0%
0%
-20%
-25%
-25%
-25%
-50%
-50%
-40%
Macau: Mass GGR YoY (incl. slots; LHS)

Overnight visitors from China YoY (RHS)
2016
2015
2014
2013
2012
2011
2010
-60%
2009
2016
2015
2014
2013
2012
2011
2010
2009
-50%
Macau: Mass GGR YoY (incl. slots; LHS)
Non-package tourists from China YoY (RHS)
Source: DICJ, , Company reports, DSEC.
Source: DICJ, Company reports, DSEC.
This is driven by growing mass appeal of Macau itself. We believe the

supply of quality properties is underpinning this trend, which in turn has enabled
Macau to offer more diverse options (e.g., hotels, non-gaming, F&B and retail) at
cheaper rates (i.e., average room rate fell 14% yoy for 9M16). Two interesting
observations that support this view:
1. Opening of Cotai 2.0 casinos was the key driver, based on the timing of
recovery (Figure 15). Recall, quality visitations have only started to turn
around from 3Q15 (for non-package tourists) and 4Q15 (for overnighters),
almost immediately following the opening of Galaxy Macau Phase II (May
2015) and Studio City (October 2015).
2. Macau is gaining share within quality visitations in the region, against
HK. The trend was evident in both overnight & non-package tourists from
China, in Figure 16-17. In our view, this suggests that turnaround is driven by
Macaus appeal in itself, and that the supply indeed drove demand in Macau
again.
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Figure 15: Supply of new properties has been clearly driving mass GGR growth
YoY % in casino hotel rooms (ex-satellite)
3Q16
1Q16
3Q15
1Q15
3Q14
1Q14
3Q13
1Q13
3Q12
1Q12
3Q11
1Q11
3Q10
1Q10
3Q09
1Q09
60%
50%
40%
30%
20%
10%
0%
(10%)
(20%)
(30%)
YoY % in mass & slot GGR
* Note: Number of hotel rooms only includes those run directly by six concessionaires (excluding 3rd-party satellite
Source: DSEC, DICJ, Company reports.
Figure 16: Overnight tourists from mainland China: Macau vs. HK
Figure 17: Individual tourists* from mainland China: Macau vs. HK
(Mn)
6.0
(Mn)
9.0
40%
8.0
30%
30%
5.0
20%
4.0
10%
7.0
20%
6.0
5.0
10%
0%
4.0
0%
1.0
(10%)
2.0
0.0
(20%)
Source: DSEC, Hong Kong Tourism Board.
(10%)
Individual tourists in MACAU

YoY % in Macau (RHS)
3Q16
1Q16
3Q15
1Q15
3Q14
1Q14
(30%)
3Q13
0.0
1Q13
(20%)
3Q12
1.0
1Q12
3Q16
1Q16
3Q15
3Q14
1Q15
Overnighters in HK (LHS)
YoY in HK overnight (RHS)
3.0
3Q11
Overnighters in Macau (LHS)

YoY in Macau overnight (RHS)
1Q14
3Q13
1Q13
3Q12
1Q12
3Q11
1Q11
2.0
1Q11
3.0
Individual tourists in HK
YoY % in HK (RHS)
* Note: For Macau, Chinese non-package tourists data (i.e., IVS, transit visa etc) are used,
same as Figure 12. For HK, we used only Chinese IVS travelers given lack of available data.
Source: DSEC, China Outbound Tourism Research Institute.
Mix within mass is healthier too; better fit for a structural growth story.
Mass gaming activities are increasingly less concentrated, as the mix within
overall mass as well as premium-mass has moved downward, toward mid-tier
premium mass & low-end/casual players. Though the change was well expected,
diversified patron base should reduce regulatory risk & demand volatility (given
less reliance on high-end premium player) and improve the visibility &
sustainability of growth, in our view.
So, how much growth should we expect for mass segment?
Admittedly, the short-term trend is anybody's guess, especially near the inflection
point of a demand cycle. But, from a big-picture standpoint, we think Chinas
nominal GDP growth should set a minimum baseline for the mass segment,
given surprisingly low gaming penetration in China (as a % of GDP; Figure 18) and
Macaus de-facto monopoly in Chinese mass market. In fact, wed argue rising
penetration should allow Macau to grow medium-term mass GGR faster than
China GDP, as its core addressable market should structurally expand with growing
affluence in China (= Chinese having more disposable income & disposable time)
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
and improving accessibility (= more/better/cheaper hotels in Macau + infra

development across China).
Figure 18: Mass gaming demand as % of GDP (2015) (Based on nationality of end-demand*)
0.92%
1.0%
0.8%
0.58%
0.6%
0.48%
0.47%
0.41%
0.4%
0.14%
0.2%
0.10%
Korea
Malaysia
US
Philippines
Singapore
China
Australia
0.0%
Note 1: Please refer to P. 34-35 of our Asian gaming initiation report (link; dated 29 October 2014) for our methodology to calculate
gaming penetration.
Note 2: All figures are based on mass-only GGR, excluding estimated VIP revenues. Australian GGR includes revenues from slot
parlors. US GGR is casino-only, including both commercial and tribal (i.e. Native American) casinos.
Source: Company reports, DICJ, Queensland government, Australia Gaming Association, PAGCOR, Bureau of Economic Analysis,
UNLV, Nevada Gaming Control Board, World Bank, J.P. Morgan estimates.
Figure 19: Mass GGR growth in the US was driven by rising

penetration
Figure 20: which was driven by growing affluence in the US
(US$ bn)
100
0.6%
(US$/capita)
60,000
0.60%
2015
2010
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
Mass GGR in the US* (LHS)
Mass GGR as % of US GDP (RHS)
Source: Bureau of Economic Analysis, World Bank, Nevada Gaming Control Board, J.P.
Morgan estimates.
US GDP/capita (LHS)
2015
0.0%
2010
0.00%
2005
0.10%
2000
10,000
0.1%
1995
20
1990
0.20%
1985
20,000
0.2%
40
1980
0.30%
0.3%
60
1975
0.40%
30,000
1970
40,000
0.4%
1965
0.50%
1960
50,000
0.5%
80
Mass GGR as % of US GDP (RHS)
Source: Bureau of Economic Analysis, World Bank, Nevada Gaming Control Board, J.P.
Morgan estimates.
Therefore, now that mass segment has already found its cyclical bottom, we forecast
mass GGR to resume its structural growth of c10-12% p.a. in 2017E-18E (vs.
consensus nominal GDP forecast of +8% p.a.), before decelerating to GDP-growthlevel of c6-7% p.a. from 2019E onwards.
Recall, mass segment now drives 85% of the industrys gaming EBITDA (or c70%
of total profits, including non-gaming); hence, the structural growth story of this
segment should again be highlighted as the crown jewel of Macaus story in years to
come, in our view.
10
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Figure 21: Mass GGR (incl. slots) and yoy growth
Figure 22: Industry EBITDA breakdown by segments and yoy growth
(US$ b)
25.0
(US$ b)
12.0
20.0
15.0
+31%
+13%
-19%
+29%
+12%
+6%
+7%
+10%
+30%
10.0
8.0
+1%
+20%
-27%
6.0
10.0
+4%
+16%
+12%
+11%
4.0
5.0
2.0
0.0
0.0
2012
2013
2014
2015 2016E 2017E
Mass GGR (incl. slots)
2018E
2019E
2012
2013
VIP EBITDA
Source: Company reports, J.P. Morgan estimates.
2014
2015 2016E 2017E 2018E 2019E
Mass EBITDA
Non-gaming EBITDA
#3. VIP recovery is clearly in the making

VIP segment had been a big drag on GGR and sentiment throughout this down-cycle
over the past two-plus years, with its revenues down over 60% from the peak in
1Q14. However, this very segment caught many by surprise recently, as VIP GGR
(rather abruptly) showed material improvements from August and turned positive
yoy in September.
Figure 23: VIP demand has been improving markedly since July 2016
VIP GGR/day (LHS)
Oct-16
Sep-16
Aug-16
Jul-16
Jun-16
May-16
Apr-16
Mar-16
Jan/Feb 16
Dec-15
Nov-15
Oct-15
Sep-15
Aug-15
Jul-15
Jun-15
May-15
Apr-15
Mar-15
Dec-14
Jan/Feb 15
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
May-14
20%
10%
0%
(10%)
(20%)
(30%)
(40%)
(50%)
Apr-14
Mar-14
Jan/Feb 14
(MOP m/day)
700
600
500
400
300
200
100
0
YoY % (RHS)
Perhaps more interestingly, there had not been any discernible change in the
operating or regulatory environment to prelude this improvement; hence, it has
sparked debates in the market as to why and if this is real. Having said that, our
extensive checks with junkets, agents and operators reveal the followings:
Recovery with or without luck. Not just revenues but also rolling volumes
(unaffected by luck) have improved substantially, negating the markets
speculation that recovery might be driven by short-term swings in luck factor.
Some dormant players have resurfaced. Timing of VIP recovery coincided
with Wynn Palace opening in late August, which seems to have created hype &
revived interest even from some dormant agents and players.
Improvement across the board. Moreover, this renewed interest seems to
have benefitted the overall segment across the board i.e., most junkets,
including relatively smaller ones, have seen better demand recently, particularly
11
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com

15 November 2016
Sean Zhuang
(852) 2800-8512
into the October Golden Week. This also suggests that there was surprisingly
little cannibalization from new casino openings, because only Big Three junkets
(i.e., Sun City, Guangdong, and Tak Chun) opened rooms at Wynn Palace &
Parisian.
Why? As for the reasons behind improvements, many cited better China
economy (?), strong property market and resulting in a boost in liquidity of
agents/players, and increased confidence of agents in extending credit to
players, among others.
Why (continued)? In fact, we acknowledge (in hindsight) that operators results
had little evidence of better credit/liquidity situation already. For example, Sands,
Wynn and MGM each had a reversal in previous bad debt (= write-backs) in
4Q15/1Q16/2Q16, respectively. Also, according to media reports (link 1, 2, 3),
Mr. Huang Shan a junket executive who allegedly embezzled US$1.3billion in
April 2014 has re-surfaced a couple weeks ago in Vietnam, and he is now
(somehow) willing to repay his debts. All of these could corroborate the junkets
feedback above on better liquidity, in our view.
Its not easy to make a structural case for VIP, nor can we foresee longer-term
sustainable growth due to inherent volatility/opaqueness as well as regulatory risks
that this segment entails; accordingly were only modelling a stabilization for the
VIP market, with VIP GGR growing +c3% p.a. in 2017E-18E.
That said, we cannot help but think that the above green shoots may signal an
upcycle for VIP here. We fully acknowledge that VIP segment itself has little bearing
on the sector's cash flow or growth picture, as VIP accounts for less than 15% of
industry profits. It does, however, impact investment sentiment through the optics of
GGR, as VIP is still ~45% of headline GGR (which historically has shown high
correction with Macau stocks).
Moreover, fundamentally, potential full-fledged recovery in VIP may trickle
down into premium-mass too, because this segment can bring in a pool of high-end
patrons to Macau, some of whom can in turn become new premium-mass players.
Recall, casino operators cannot directly market gaming/casino in China due to
illegality, hence they have to rely on in-bound gamblers for the acquisition of new
players. Thus, increased pool of VIP players (mainly brought by junkets) can
effectively expand addressable market for casinos high-end business, in turn
working as good source of new premium-mass players.
All in all, we sense that the market might be overly pessimistic about VIP segment
(understandably so), and that VIP may actually provide more upside risks than
downside at this point of time. This would be a nice boon to the markets sentiment
on the sector, in turn possibly leading more investors/analysts to regain confidence
on the sectors outlook (though fundamentally not-so-meaningful vs., vs. mass
recovery).
Also, see below for VIP demand growth, vs. a few macro indicators in China. We
can see how cyclical VIP is, driven by various macro backdrop; but in any case,
macro cycle appears largely favorable for now.
12
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Figure 25: Macau's VIP GGR vs. liquidity condition* in China
150%
15%
150%
100%
10%
100%
50%
5%
50%
0%
0%
0%
Macau: VIP GGR YoY (LHS)
125
100
75
-50%
China PPI YoY (RHS)
Source: Bloomberg* (CHBGMCI Index), DICJ.
Figure 26: Macau's VIP GGR vs. China property index*
Figure 27: Macau's VIP GGR vs. China M2 growth

60%
100%
40%
50%
2016
China monetary condition index (RHS)
Source: NBS, DICJ.
150%
2015
2014
2013
2012
2011
2010
50
2008
-100%
2016
2015
2014
2013
2012
2011
-10%
2010
-100%
2009
-5%
2008
-50%
150
2009
Figure 24: Macau's VIP GGR vs. China PPI growth
150%
30%
100%
25%
50%
20%
0%
15%
-50%
10%
-100%
5%
China property price index* YoY (RHS)
Source: Centaline* (we averaged price indices in Beijing, Shanghai, Shenzhen & Tianjin), DICJ.
2016
2015
2014
2013
2012
2016
2015
2014
2013
2012
2011
2010
2009
(20%)
2008
-100%
2011
-50%
2010
0%
2009
0%
2008
20%
China M2 YoY (RHS)
Source: PBoC, DICJ.
13
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Summary of our forecasts

Table 4: Macau gaming: industry GGR and EBITDA forecasts
(US$ b)
GGR
YoY
QoQ
2014 1Q15 2Q15 3Q15 4Q15

44.0
8.1
7.1
6.8
6.9
(3%) (37%) (37%) (34%) (27%)
(14% ) (12% ) (4% )
1%
VIP
YoY
QoQ
26.3
4.3
3.6
3.3
3.2
(12%) (47% ) (47% ) (44% ) (41% )
(21% ) (15% ) (11% ) (1% )
Mass tables
YoY
QoQ
15.6
3.4
3.0
3.1
3.2
17% (17% ) (24% ) (22% ) (10% )
(5% ) (10% )
2%
3%
Slots & ETG

YoY
QoQ
2.1
0.4
0.4
0.4
5% (23% ) (17% ) (20% )
(8% )
1%
0%
Luck-adj EBITDA
Margin % on GGR
YoY
QoQ
0.4
(6% )
1%
2015 1Q16 2Q16 3Q16 4Q16E

28.9
7.0
6.5
6.9
7.4
(34%) (13%) (9%)
1%
8%
2% (8% )
7%
7%
2016E 1Q17E 2Q17E 3Q17E 4Q17E

27.7
7.5
7.3
7.5
7.8
(4%)
7% 12%
9%
6%
2% (3% )
3%
5%
2017E
30.1
9%
2018E
32.1
6%
2019E
33.9
6%
14.4
3.3
2.9
(45%) (23% ) (21% )
3% (13% )
3.0
(7% )
5%
3.3
2%
9%
12.5
(13%)
3.3
1%
1%
3.2
11%
(4% )
3.2
5%
0%
3.3
0%
4%
13.0
4%
13.3
2%
13.7
3%
12.8
(18%)
3.3
(3% )
2%
3.2
5%
(3% )
3.4
10%
8%
3.6
13%
6%
13.5
6%
3.7
13%
2%
3.6
13%
(3% )
3.8
11%
6%
4.0
9%
5%
15.1
11%
16.5
10%
17.7
7%
1.7
(17%)
0.4
(1% )
(3% )
0.4
(8% )
(6% )
0.4
(1% )
8%
0.5
5%
7%
1.7
(1%)
0.5
14%
5%
0.5
20%
(1% )
0.5
21%
8%
0.6
22%
8%
2.0
19%
2.3
10%
2.5
10%
9.45 1.63 1.47 1.48 1.52

6.11 1.49 1.42 1.58 1.72
6.21 1.77 1.73 1.81 1.92
7.23
8.11
9.02
21.5% 20.1% 20.7% 21.7% 22.2% 21.1% 21.2% 22.0% 23.0% 23.2% 22.4% 23.5% 23.9% 24.1% 24.4% 24.0% 25.3% 26.6%
2% (40%) (40%) (37%) (23%) (35%) (9%) (3%)
7% 13%
2% 19% 22% 15% 12%
16%
12%
11%
(18% ) (9% )
0%
3%
(2% ) (4% ) 11%
9%
3% (2% )
5%
6%
GGR/day (MOP m)
VIP
Mass & slots
963
575
388
720
382
338
625
319
305
591
282
309
596
279
317
632
315
317
617
291
327
567
252
315
598
262
335
642
286
356
606
273
333
668
296
373
638
279
358
652
276
375
681
287
394
659
284
375
702
291
412
742
300
442
Source: DICJ, Company reports, J.P. Morgan estimates.
GGR assumptions. Reflecting our bullish stance, we lift industry GGR forecasts to
+9%/+6%/+6% for 2017/18/19 (old: +5%/+7% for FY17E/18E). By segment, we
expect mass/slot GGR to deliver a robust 10% CAGR over the next three years
(+12%/+10%/+7% in 2017/18/19E), while VIP to modestly recover at 3% CAGR
(+4%/+2%/+3% in 2017/18/19E).
Of note, our GGR estimates for 4Q16 (+8% yoy) and 2017 (+9% yoy) are probably
the highest on the Street, as we understand average consensus expectations are at
about +4~6% yoy for both 4Q16 & 2017.
Figure 28: Macaus gaming demand (GGR/day) and YoY growth
(MOP m/day)
1,200
20%
10%
0%
(10%)
(20%)
(30%)
(40%)
(50%)
1,000
800
600
400
200
GGR/day (LHS)
14
YoY % (RHS)
Oct-16
Sep-16
Aug-16
Jul-16
Jun-16
Apr-16
May-16
Mar-16
Dec-15
Jan/Feb 16
Oct-15
Nov-15
Sep-15
Jul-15
Aug-15
Jun-15
May-15
Apr-15
Mar-15
Jan/Feb 15
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
May-14
Apr-14
Mar-14
Jan/Feb 14
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com

15 November 2016
Sean Zhuang
(852) 2800-8512
EBITDA estimates. Since weve already updated company estimates with 3Q16
results recently, our EBITDA estimates remain largely unchanged. To recap, we
forecast industrys EBITDA to grow strongly by +16% in 2017, followed by a
steadily & solid low-teen growths in 2018-19.
We believe EBITDA growth should materially outpace top-line growth, driven by
mix improvement (i.e., mass margin is 3-4x higher than VIPs) and positive
operating leverage. Moreover, leaner OPEX structure (thanks to continued costsavings throughout the downturn) and disciplined promo activities (as evidenced
from 3Q16 results) should collectively help drive big margin expansions, in our
view. As a result, our 2019E EBITDA is 45% higher than 2016Es. Please see Tables
6-7 for more details.
JPMe vs. consensus. Our EBITDA estimates are substantially higher than consensus,
by 10-12% for 2017-19. We think the key delta vs. consensus comes from our more
bullish GGR assumptions, which in turn leads to higher margin on operating leverage.
Therefore, we expect consensus upgrades to kick-in materially into sustainable &
stronger-than-consensus GGR recovery into 4Q16/2017, which will likely work as
the key stock catalyst.
Figure 29: We see sizable >10% upsides to consensus EBITDA amidst a genuine industry upturn
(US$ b)
100.0
(US$ b)
7.5
JPMe: $7.1b for FY17E
90.0
7.0
60.0
5.5
50.0
5.0
Macau: aggregated market cap (LHS)
Oct-16
6.0
Jul-16
70.0
Apr-16
6.5
Jan-16
80.0
FY16 consensus EBITDA (LHS)
FY17 (LHS)
15
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com

15 November 2016
Sean Zhuang
(852) 2800-8512
Table 5: JPMe vs. Consensus: Adjusted EBITDA forecasts for 2016-18

J.P. Morgan
Consensus
JPM vs. consensus
2016E
2017E
2018E
2016E
2017E
2018E
2016E
2017E
2018E
Sands
2,286
2,730
3,008
2,064
2,359
2,516
11%
16%
20%
YoY %
3%
19%
10%
-7%
14%
7%
Galaxy
1,274
1,416
1,501
1,241
1,246
1,317
3%
14%
14%
YoY %
13%
11%
6%
10%
0%
6%
Wynn
637
814
970
616
870
942
3%
-6%
3%
YoY %
5%
28%
19%
2%
41%
8%
3%
4%
4%
2%
16%
0%
7%
10%
9%
6%
10%
12%
(US$ m)
MGM
521
597
788
508
574
758
YoY %
-5%
15%
32%
-8%
13%
32%
SJM
425
429
503
415
370
501
YoY %
-15%
1%
17%
-17%
-11%
35%
MPEL
985
1,099
1,165
923
996
1,071
YoY %
21%
12%
6%
13%
8%
8%
6,128
7,086
7,935
5,768
6,415
7,105
5%
16%
12%
-1%
11%
11%
Industry total
YoY %
Source: J.P. Morgan estimates, Bloomberg consensus.
Table 6: Macau gaming: Our GGR forecasts by segment & operator

(US$ m)
2014
2015 2016E 2017E 2018E 2019E
Gross gaming revenue
Sands
10,024 6,670 6,374 7,137 7,496 7,811
Galaxy
9,148 6,243 6,227 6,464 6,535 7,318
MPEL
5,711 4,126 4,289 4,533 4,608 4,754
Wynn
4,501 2,797 3,173 4,110 4,389 4,573
MGM
4,247 2,697 2,235 2,490 2,942 3,104
SJM
10,222 6,268 5,296 5,214 5,921 6,146
GGR total 43,853 28,800 27,594 29,949 31,892 33,706
VIP revenue
Sands
4,419 2,315 1,887 1,923 1,932 1,951
Galaxy
6,492 3,732 3,312 3,351 3,350 3,626
MPEL
3,234 1,962 1,741 1,903 1,909 1,945
Wynn
3,052 1,660 1,910 2,398 2,455 2,491
MGM
2,756 1,514 1,060
906
933
933
SJM
6,222 3,233 2,459 2,389 2,557 2,623
VIP GGR
26,174 14,416 12,369 12,870 13,137 13,570
Mass revenues (Including slots)
Sands
5,605 4,355 4,487 5,214 5,564 5,860
Galaxy
2,656 2,511 2,915 3,113 3,185 3,692
MPEL
2,477 2,164 2,549 2,630 2,699 2,809
Wynn
1,449 1,137 1,263 1,713 1,934 2,082
MGM
1,491 1,183 1,175 1,584 2,009 2,171
SJM
4,001 3,035 2,836 2,825 3,365 3,523
Mass GGR 17,679 14,385 15,225 17,079 18,755 20,136
16
2014
2015 2016E 2017E
GGR - YoY changes
Sands
3% (33% )
(4% )
12%
Galaxy
9% (32% )
(0% )
4%
MPEL
(9% ) (28% )
4%
6%
Wynn
(9% ) (38% )
13%
30%
MGM
(5% ) (37% ) (17% )
11%
SJM
(9% ) (39% ) (16% )
(2% )
GGR total
(3%) (34%)
(4%)
9%
VIP GGR - YoY changes
Sands
(12% ) (48% ) (19% )
2%
Galaxy
8% (43% ) (11% )
1%
MPEL
(23% ) (39% ) (11% )
9%
Wynn
(17% ) (46% )
15%
26%
MGM
(15% ) (45% ) (30% ) (15% )
SJM
(14% ) (48% ) (24% )
(3% )
VIP GGR
(11%) (45%) (14%)
4%
Mass GGR (Including slots) - YoY changes
Sands
19% (22% )
3%
16%
Galaxy
11%
(5% )
16%
7%
MPEL
20% (13% )
18%
3%
Wynn
17% (22% )
11%
36%
MGM
23% (21% )
(1% )
35%
SJM
(0% ) (24% )
(7% )
(0% )
Mass GGR
13% (19%)
6%
12%
2018E
2019E
5%
1%
2%
7%
18%
14%
6%
4%
12%
3%
4%
6%
4%
6%
0%
(0% )
0%
2%
3%
7%
2%
1%
8%
2%
1%
0%
3%
3%
7%
2%
3%
13%
27%
19%
10%
5%
16%
4%
8%
8%
5%
7%
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com

15 November 2016
Sean Zhuang
(852) 2800-8512
Table 7: Macau gaming: Our EBITDA and FCF forecasts

(US$ m)
2014 2015 2016E 2017E 2018E 2019E
Gross revenue (including non-gaming)
Sands
11,629 8,125 7,844 8,879 9,303 9,691
Galaxy
9,253 6,577 6,637 6,889 7,023 8,057
MPEL
6,092 4,910 5,459 5,733 5,847 6,071
Wynn
4,932 3,137 3,584 4,725 5,023 5,231
MGM
4,397 2,834 2,363 2,758 3,353 3,560
SJM
10,308 6,343 5,362 5,290 6,214 6,510
Industry
46,611 31,925 31,248 34,274 36,761 39,121
EBITDA (before pre-opening & one-offs)
Sands
3,178 2,118 2,134 2,572 2,832 3,041
Galaxy
1,647 1,069 1,211 1,353 1,438 1,617
MPEL
1,142
775
932 1,048 1,110 1,213
Wynn
1,060
576
606
786
941 1,041
MGM
850
538
510
586
777
873
SJM
1,001
498
425
429
503
669
Industry
8,878 5,575 5,818 6,774 7,601 8,454
Capex
Sands
931 1,251 1,435
575
215
215
Galaxy
1,200
928
347
380 1,126
759
MPEL
1,637 1,456
515
455
255
180
Wynn
1,072 1,639
850
113
113
129
MGM
355
591 1,216
659
80
85
SJM
471
432 1,029 2,123
289
129
Industry
5,665 6,298 5,393 4,304 2,077 1,496
As % of sales 12.2% 19.7% 17.3% 12.6% 5.7% 3.8%
Recurring FCF to the equity (before expansionary capex)
Sands
2,905 1,748 2,033 2,537 2,530 2,762
Galaxy
1,433
900 1,296 1,332 1,379 1,449
MPEL
845
506
611
685
724
826
Wynn
624
187
462
777
712
772
MGM
589
314
389
491
589
674
SJM
821
74
327
355
331
475
Industry
7,217 3,729 5,119 6,177 6,264 6,957
Net debt
Sands
658 2,094 3,447 3,306 2,827 2,116
Galaxy
-1,208
-910 -1,761 -2,525 -2,513 -2,867
MPEL
378 1,310 2,236 2,139 1,799 1,176
Wynn
1,007 3,171 4,033 3,643 3,319 2,942
MGM
-15
814 1,712 1,985 1,517 1,020
SJM
-3,044 -2,142 -1,282
663
751
487
Industry
-2,222 4,338 8,385 9,211 7,700 4,873
2014 2015 2016E

Gross revenue - YoY change
Sands
5% (30% ) (3% )
Galaxy
9% (29% )
1%
MPEL
(8%) (19% )
11%
Wynn
(8%) (36% )
14%
MGM
(5%) (36% ) (17% )
SJM
(9%) (38% ) (15% )
Industry
(2%) (32%)
(2%)
EBITDA - YoY change
Sands
12% (33% )
1%
Galaxy
3% (35% )
13%
MPEL
(5%) (32% )
20%
Wynn
(6%) (46% )
5%
MGM
4% (37% ) (5% )
SJM
(10%) (50% ) (15% )
Industry
1% (37%)
4%
Capex - YoY change
Sands
55%
34%
15%
Galaxy
23% (23% ) (63% )
MPEL
79% (11% ) (65% )
Wynn
142%
53% (48% )
MGM
34%
67% 106%
SJM
217% (8% ) 138%
Industry
69%
11% (14%)
2017E 2018E 2019E

13%
4%
5%
32%
17%
(1% )
10%
5%
2%
2%
6%
22%
17%
7%
4%
15%
4%
4%
6%
5%
6%
21%
12%
12%
30%
15%
1%
16%
10%
6%
6%
20%
33%
17%
12%
7%
12%
9%
11%
12%
33%
11%
(60%)
9%
(12%)
(87%)
(46%)
106%
(20%)
Recurring eFCF - YoY change

Sands
4% (40% )
16%
Galaxy
24% (37% )
44%
MPEL
(14%) (40% )
21%
Wynn
(51%) (70% ) 147%
MGM
(33%) (47% )
24%
SJM
(33%) (91% ) 343%
Industry
(13%) (48%)
37%
Net debt to EBITDA
Sands
0.1x
0.2x
1.0x
Galaxy
-0.9x -0.8x -1.0x
MPEL
-0.5x
0.4x
2.3x
Wynn
-0.5x
1.0x
6.1x
MGM
-0.6x
0.0x
1.5x
SJM
-3.0x -3.1x -4.7x
Industry
-0.7x -0.3x
0.9x
(63%)
0%
197% (33% )
(44%) (29% )
0%
14%
(88%)
6%
(86%) (56% )
(52%) (28%)
25%
3%
12%
68%
26%
8%
21%
(0%)
3%
6%
(8%)
20%
(7%)
1%
9%
5%
14%
8%
14%
43%
11%
1.7x
-1.5x
2.4x
8.7x
3.5x
-3.4x
1.5x
1.3x
-1.9x
2.1x
4.6x
4.2x
1.8x
1.4x
1.0x
-1.8x
1.7x
3.5x
2.0x
1.8x
1.0x
Table 8: Our ROIC projections on new Cotai projects

Opening Capex (US$ b) Property EBITDA (US$ m) ROIC (on property budget)
CompanyProject
MPEL Studio City
Wynn Wynn Palace
Sands Parisian
MGM
MGM Cotai
SJM
Lisboa Palace
(JPMe) Property
Oct-15
2.3
Aug-16
3.8
Sep-16
2.6
2Q17E
2.9
1Q18E
4.0
All-in
3.2
4.4
N/A
3.1
N/A
1st yr
12
84
100
111
58
2nd yr
161
361
492
310
215
3rd yr
243
509
640
415
305
Average
1st yr
0.5%
2.2%
3.9%
3.9%
1.5%
2.4%
2nd yr
7.0%
9.6%
19.3%
10.9%
5.4%
10.4%
3rd yr
10.6%
13.6%
25.1%
14.5%
7.6%
14.3%
17
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Figure 30: Map of Cotai
T5
Galaxy Macau
Phase I
City of Dreams
Broad
Way
Wynn
Palace
Venetian
G/M
Phase II
Four
Seasons
G/M
Phase III & IV
Sands
Cotai
Central
Parisian
MGM
Cotai
Lisboa
Palace
TBD
TBD
Studio City
Immigration
Source: J.P. Morgan.
Our two cents on sector valuation

Figure 31: Macaus historical EV/EBITDA (12-month forward rolling)
Figure 32: Industry EBITDA split by segment
(US$ b)
200
100%
(x)
25
150
+1 S.D.
20
100
Average = 14x
15
80%
60%
40%
Macau: market cap (LHS)

12m fwd EV/EBITDA (Rolling; RHS)
20%
VIP
Mass & slot
3Q16
1Q16
3Q15
1Q15
3Q14
1Q14
3Q13
1Q13
0%
3Q12
Jul-16
Jan-16
Jul-15
Jan-15
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
1Q12
-1 S.D.
3Q11
10
1Q11
50
Non-gaming & etc
Source: J.P. Morgan estimates.
Is current EV/EBITDA expensive? (No, not at all in our opinion) The sector is
trading at 13x 2017E EV/EBITDA, modestly below its long-term average level of
14x (Figure 31). This might not look cheap enough for some investors, given that the
long-term growth prospect is likely weaker than those during Macaus heyday
(recall, GGR has doubled in three years & tripled in five years till 2013).
However, we highlight that at the beginning of big demand/earnings cycle (like the
ones were facing), current valuations are largely unimportant, as the market will
increasingly focus on medium-term industry dynamics where demand & capex are
fully normalized. This is particularly important for Macau at this point in time,
as the sectors big capex cycle is largely over into 2017E, which will dramatically
expand the industrys FCFs and in turn reduce EVs (via lower net debt). Put
differently, for a market where expansion capex (= new casino opening) is
effectively controlled by the government, EV/EBITDA multiples will have to drop
18
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
over time in a steady EBITDA environment, given strong FCFs and improving
balance sheet.
In addition, note that the sectors business mix has significantly improved during this
past downturn, as VIP (= volatile and unpredictable, hence low quality, profit stream)
contribution has fallen to only about 10%, vs. ~40% only 3-4 years ago (Figure 31).
This, along with vastly improving FCF profile, should drive the sectors long-term
rerating of multiples, in our view.
Its all about cash. We view cash flow-based valuation works are fundamentally a
good fit for Macau gaming, given the sectors strong cash flow generation and
operators high propensity to pay out dividends, not to mention significant change in
CAPEX cycles. Against this backdrop, we feel very comfortable about the sectors
valuation levels, because the analysis on both relative and absolute CF valuations
suggest strong upside here.
Relatively speaking: The sectors recurring FCF yield of 8.1% on 2017E is
meaningfully higher than its long-term average of 6.5%, or 3-year average of
5.7% (Figure 33)
Absolutely speaking: In order to understand what level of valuation assumptions
are baked into current share prices, we carry out a reverse-DCF analysis on the
sector using our full-scale bottom-up models through 2017-22E (Table 9 for our
key assumptions). And the result is quite surprising i.e., our analysis suggests
the current market cap implies the terminal growth of -1.5% from 2022E
(Figure 34), which simply looks too conservative to us, even considering the
sectors inherent risks, such as the license renewal & etc.
Figure 33: Macaus recurring FCF* yields (12-month forward rolling)
(US$ b)
200
100
50
2%
-1 S.D.
4%
Average = 6.5%
6%
+1 S.D.
8%
10%
12%
Macau: market cap (LHS)
Jul-16
Jan-16
Jul-15
Jan-15
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
150%
0%
12m fwd FCF yield (RHS; reversed axis)
* Note: FCF before expansion capex (= EBITDA maintenance capex W/C changes)
Upside to fair value (%)
150
Figure 34: Reverse DCF model sensitivity on implied terminal g
65% upsides at +3% 'g'
125%
100%
75%
50%
Current market cap implies -1.5% 'g'
25%
0%
-25%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
Terminal growth assumption (%)

* Note: Industry WACC assumption of 8.4%
19
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Table 9: Our reverse DCF model on Macau gaming industry

2017E
2018E
2019E
2020E
2021E
2022E
34.3
36.8
39.1
40.5
41.7
42.9
9.6%
7.3%
6.4%
3.5%
3.0%
3.0%
6.6
7.5
8.4
9.1
9.0
9.4
19.3%
20.3%
21.4%
22.5%
22.7%
22.9%
0.8
0.1
0.0
0.1
-0.3
0.8
-4.3
-2.1
-1.5
-0.9
-1.3
-1.3
12.6%
5.7%
3.8%
2.3%
3.0%
3.0%
-0.2
-0.2
-0.2
-0.2
0.0
0.0
2.8
5.2
6.7
8.2
7.5
8.9
2.8
4.8
5.7
6.4
5.4
5.9
Comments
143.6
-9.2
134.4 (Based on +3% 'g', 8.8% CoE & 8.4% WACC)
81.3
65%
(US$ bn)
Gross revenues
yoy %
EBITDA
EBITDA margin %
(Changes in working capital)
(Capex)
Capex as % of revenue
(Other adjustments)
Free cash flows (FCF)
PV of FCF
Enterprise Value
Less: net debt
Fair equity value
Current market cap
Upside / (downside) %
Terminal
Value
168.7
112.6
Valuation summary
Table 10: Global gaming: Valuation comparison (Price as of 14 November 2016)
J.P. Morgan
Ticker
MACAU
1928 HK
27 HK
1128 HK
2282 HK
880 HK
MPEL US
200 HK
Company
Sands China
Galaxy Ent
Wynn Macau
MGM China
SJM Holdings
Melco Crown
Melco Int'l
KOREA
035250 KS Kangwon
114090 KS GKL
034230 KS Paradise Co
SINGAPORE & MALAYSIA
GENS SP Genting SG
GENM MK Genting MY
US / AUSTRALIA
LVS US
LVS
WYNN US Wynn Resorts
MGM US MGM Resorts
CWN AU
SGR AU
SKC NZ
Crown
Star Ent
Skycity Ent
Rating
OW
OW
OW
OW
N
N
N
Price Mkt cap Share perf (%)
PT (Local) (US$ b)
39.0
39.0
14.5
17.0
5.8
17.0
11.5
3-mo
YTD
EV/EBITDA (x)*
13.7 12.5
10.8 9.4
11.8 10.3
11.2 9.4
9.4 6.7
9.6 8.2
NA NA
11.1 9.4
24.0
24.2
25.1
18.4
12.7
27.9
NA
22.0
20.5
20.2
30.8
24.4
12.9
20.1
NA
21.5
18.0
18.4
18.7
22.5
19.5
19.9
NA
19.5
6.5
7.0
11.0
8.2
5.7
6.4
8.7
6.9
14.9
12.0
17.3
14.8
14.2
14.2
20.2
16.2
13.3 3.2% 3.4%

15.7 3.9% 3.6%
19.5 3.1% 3.1%
16.2 3.4% 3.3%
5% 29%
16% 33%
-10% 28%
28% 52%
4% -1%
15%
1%
18% -10%
11% 19%
18.5
13.5
19.4
17.5
6.4
11.9
NA
14.5
OW 45.0k 36,150
6.6
N 24.0k 21,050
1.1
N 14.0k 12,950
1.0
Korea average
-14% -6%
-20% -13%
-20% -27%
-18% -15%
8.1 7.4
5.6 6.5
14.6 15.2
9.4 9.7
N 45.0
N 93.0
OW 32.0
NR NC
NR
NC
NR NC
NR
NC
NR NC
NR
NC
0.87
4.49
Div yield (%)
'16E '17E '18E
34.6
35.9
32.8
18.1
11.6
7.8
14.7
7.2
5.4
4.0
17.0
8.4
10.4
2.1
Macau average
N 0.90
N 4.4
P/E (x)*
'16E '17E '18E '19E

15.3
11.5
14.5
15.7
10.8
10.5
NA
13.0
'17E '18E
5.8%
1.5%
5.2%
1.3%
3.9%
3.8%
3.0%
3.6%
'17E
'18E
'19E
5.8% 7.1%
1.6% 7.4%
5.2% 10.0%
2.2% 6.8%
3.9% 8.9%
3.8% 8.2%
2.8%
NA
3.7% 8.1%
7.0%
7.6%
9.2%
8.2%
8.3%
8.6%
NA
8.2%
7.7%
8.0%
9.9%
9.3%
12.0%
9.9%
NA
9.5%
7.3
5.9
15%
3%
13%
3%
11.3
10.2
9.1
9.1
8.7
7.6
8.0
7.0
37.5
18.1
24.6 23.1 3.5% 3.5%

15.6 12.6 1.9% 2.5%
58.0
46.1
85.0
8.6
27.5
15.8
US average
12%
-15%
12%
3%
32%
23%
21%
25%
14.5 12.8
14.3 11.8
12.7 9.9
13.8 11.5
11.9
10.6
8.6
10.4
14.5
14.3
12.7
13.8
25.1
22.5
24.8
24.1
22.2
19.5
21.2
21.0
-20% -15%
-18% -3%
-25% -14%
-21% -11%
11.9 11.4
8.5 8.8
8.5 8.6
9.6 9.6
11.2
8.2
8.8
9.4
11.4
8.8
8.6
9.6
19.2
17.0
13.9
16.7
17.7
17.2
15.1
16.7
10.7
5.9
4.9
3.1
3.7
1.8
Australia average
Recurring FCF yld
EBITDA growth *
'17E '18E '19E
21%
12%
30%
15%
1%
12%
NA
15%
7%
12%
11%
12%
33%
9%
NA
14%
5.5% 6.6% 7.7%

5% 7% 8%
5.8% 5.5% 6.3% -16% -9% 4%
4.0% 5.7% 9.9% 16% 50% 20%
5.1% 5.9% 8.0%
2% 16% 11%
5.5%
4.0%
5.0%
5.1%
5.7%
5.9%
17% 3%
20% 23%
6%
9%
20.4 5.1% 5.1%

17.1 2.9% 2.7%
17.0
NA
NA
18.2 4.0% 3.9%
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
13% 5%
22% 10%
26% 11%
20% 9%
NM
NM
NM
NM
NM
16.5
15.9
14.4
15.6
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
3%
-1%
-2%
0%
NM
NM
NM
NM
5.1%
2.8%
5.6%
4.5%
5.3%
3.1%
5.6%
4.7%
* Note: We used EBITDA & NP before one-offs, such as pre-opening or asset disposal gain/loss (but after any recurring expenses, such as corporate expenses or royalty payment).
Source: J.P. Morgan estimates for Asian casinos, Bloomberg consensus for US and Australia casinos.NC=not covered.
20
10%
6%
20%
33%
17%
6%
NA
15%
6%
8%
6%
7%
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Historical valuations
Figure 35: Sands China: Historical EV/EBITDA (12m fwd rolling)
(HK$)
70
Figure 36: Sands China: Historical P/E (12m fwd rolling)

(x)
(HK$)
70
(x)
35
23
+1 S.D.
18
Average = 16x
30
13
-1 S.D.
(x)
30
(HK$)
80
25
60
Jul-16
Jan-16
Jul-15
Jan-15
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jul-16
Jan-16
Jul-15
Jan-15
35
25
10
15
-1 S.D.
Wynn Macau: share price (LHS)
Jul-16
Jan-16
Jul-15
Jul-14
Jul-16
+1 S.D.
Average = 23x
Jan-15
Wynn Macau: share price (LHS)

12m fwd EV/EBITDA (rolling; RHS)
Jan-16
Jul-15
Jan-15
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
20
45
Jan-14
10
30
Jul-13
15
55
Jan-13
20
(x)
Jul-12
25
(HK$)
40
Jan-12
30
-1 S.D.
Jul-11
Jan-12
Figure 40: Wynn Macau: Historical P/E (12m fwd rolling)

(x)
35
Jul-11
(HK$)
40
Jan-11
12m fwd P/E (rolling; RHS)
Figure 39: Wynn Macau: Historical EV/EBITDA (12m fwd rolling)
Jul-14
Jan-11
Galaxy: share price (LHS)
Average = 18x
-1 S.D.
0
Jul-16
Jan-16
Jul-15
Jan-15
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
0
Jan-11
20
Jan-14
Average = 19x
Jul-13
10
Jan-13
15
-1 S.D.
(x)
45
40
35
30
25
20
15
10
5
0
+1 S.D.
40
Jul-12
40
Average = 13x
20
Jan-12
+1 S.D.
Jul-11
60
20
Figure 38: Galaxy: Historical P/E (12m fwd rolling)
(HK$)
80
10
Sands China: share price (LHS)

Figure 37: Galaxy: Historical EV/EBITDA (12m fwd rolling)
+1 S.D.
Jul-11
Jan-11
30
15
10
Galaxy: share price (LHS)
20
30
10
Jul-16
Jan-16
Jul-15
Jan-15
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
20
25
Average = 20x
-1 S.D.
10
Sands China: share price (LHS)
30
+1 S.D.
50
Jan-11
50
21
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Figure 42: MGM China: Historical P/E (12m fwd rolling)

(x)
25
(HK$)
40
Average = 13x
15
20
10
10
10
20
Average = 16x
15
(x)
20
(HK$)
30
25
18
25
15
20
13
15
10
10
22
15
30
10
20
10
Jan-13
Jul-12
Jul-16
Jan-16
Jul-15
Jan-15
Jul-14
Jan-14
Jul-13
35
Average = 22x
25
15
-1 S.D.
Jul-16
Jan-16
Jul-15
Jan-15
MPEL: share price (LHS)
Jul-14
Jul-13
Jan-14
+1 S.D.
Jan-13
Jul-16
Jan-16
Jul-15
Jul-14
Jan-15
MPEL: share price (LHS)
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
40
Jul-12
-1 S.D.
20
(x)
45
Jan-12
20
(US$)
50
Jul-11
Average = 13x
(x)
25
Jan-11
+1 S.D.
10
Figure 46: MPEL: Historical P/E (12m fwd rolling)
(US$)
50
30
SJM: share price (LHS)
Figure 45: MPEL: Historical EV/EBITDA (12m fwd rolling)
40
10
Jan-13
15
Jul-12
Jul-16
Jan-16
Jul-15
Jul-14
Jan-15
SJM: share price (LHS)
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
20
-1 S.D.
Jan-12
-1 S.D.
25
Average = 16x
Jul-11
Average = 10x
(x)
30
+1 S.D.
Jan-11
+1 S.D.
10
Figure 44: SJM: Historical P/E (12m fwd rolling)
(HK$)
30
15
Jan-12
MGM China: share price (LHS)

Figure 43: SJM: Historical EV/EBITDA (12m fwd rolling)
20
Jul-11
Jan-11
Jul-16
Jan-16
Jul-15
Jul-14
Jan-15
MGM China: share price (LHS)
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
10
-1 S.D.
-1 S.D.
Jul-16
20
25
+1 S.D.
Jan-16
30
Jul-15
20
Jan-15
+1 S.D.
Jul-14
30
(x)
30
Jan-14
(HK$)
40
Jul-13
Figure 41: MGM China: Historical EV/EBITDA (12m fwd rolling)
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Wynn Macau
Investment Thesis, Valuation and Risks
Wynn Macau (Overweight; Price Target: HK$14.50)
Investment Thesis
We are OW on Wynn Macau with a Dec-17 PT of HK$14.5.
Longer term, we see a clear path for the company to exhibit substantial growth with a
multi-year ramp in Palace i.e., we forecast its EBITDA to rise over 50% during
2016-18E, which would be among the fastest growths in Macau and imply a 24%
CAGR, vs its peers average of a 14% CAGR. In fact, we see upside risk to our
medium-term estimates, as weve already toned down our expectations for Palace
to err on the side of caution.
The stock generates very attractive FCF yields of 9-10% for FY17-19E, which is the
highest level in Macau, as well as JPM Global gaming universe. Its medium-term
multiples also look compelling, at sub-12x EV/EBITDA on 2018E or 10x on 2019E.
A combo of substantial growth prospect, compelling valuations, and a handsome 5%
dividend yield makes this stock as among our top-picks.
Valuation
Our Dec-17 price target of HK$14.5 is derived from a DCF methodology, assuming
7.3% WACC and 3% terminal growth and a 50% discount to terminal value. Our PT
implies 17x EV/EBITDA on 2017E but 14x on 2018E.
Risks to Rating and Price Target
Downside risks to our rating and price target include: 1) slower-than-expected ramp
at Wynn Palace; 2) RMB devaluation could dampen gaming demand from China &
could further tighten liquidity within the junket system; 3) unfavorable regulatory
changes (e.g., China capital outflow control, junket industry regulation, full smoking
ban, potential costs associated with concession renewal, etc.); and 4) stronger-thanexpected competitive pressure from new Cotai casinos
Company Data
52-week Range (HK$)
Market Cap (HK$ mn)
Market Cap ($ mn)
Shares O/S (mn)
Price (HK$)
Date Of Price
3M - Avg daily vol (mn)
3M - Avg daily val (HK$ mn)
Price Target End Date
14.18-6.51
60,003
7,734
5,182
11.58
14 Nov 16
20.29
249.35
31-Dec-17
Wynn Macau Ltd (Reuters: 1128.HK, Bloomberg: 1128 HK)

HK$ in mn, year-end Dec
FY14A
FY15A
FY16E
Revenue (HK$ mn)
29,445
19,096
21,724
Adjusted EBITDA (HK$ mn)
8,423
4,681
4,951
EBITDA (HK$ mn)
7,952
4,032
3,613
Net Profit (HK$ mn)
6,445
2,410
1,287
DPS (HK$)
0.70
1.05
0.60
Core EPS (HK$)
1.30
0.56
0.46
Dividend Yield
6.0%
9.1%
5.2%
Core P/E (x)
8.9
20.7
25.1
Core EV/EBITDA (x)
8.3
18.9
19.4
FY17E
28,624
6,328
6,107
1,950
0.60
0.38
5.2%
30.8
14.5
FY18E
30,901
7,537
7,316
3,205
0.60
0.62
5.2%
18.7
11.7
Source: Company data, Bloomberg, J.P. Morgan estimates.
23
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Key catalysts for the stock price:
Upside risks to our view:
Downside risks to our view:
Ramp up of Wynn Palace

Sequentially improving gaming demand
More positive regulatory environment would
improve investment sentiment and drive up
share prices for the sector
New positive policy (such as further visa policy loosening,

allowing smoking lounges inside casinos)
Stronger-than-expected improvement in demand
Slower-than-expected ramp at Wynn Palace

RMB devaluation could dampen gaming demand from
China & could further tighten liquidity within the junket
system
Unfavorable regulatory changes (e.g., China capital
outflow control, junket industry regulation, full smoking
ban, potential costs associated with concession
renewal, etc.)
Stronger-than-expected competitive pressure from
new Cotai
Key financial metrics (HK$m)

Reported revenues (net)
Revenue growth (%)
EBITDA (reported)
EBITDA margin (%)
Net profit
EPS (HK$, ex-one-offs)
EPS growth (%)
DPS (HK$)
Operating cash flow
Capex
Free cash flow
Net debt/equity (%)
ROE (%)
Key model assumptions (HK$m)
Gross revenues
YoY (%)
VIP
YoY (%)
Mass & slots
YoY (%)
Non-gaming and others
YoY (%)
Adjusted EBITDA
YoY (%)
Adjusted EBITDA margin (%)
Industry assumptions (US$ m)
Macau - Gross gaming revenue
YoY (%)
VIP GGR
YoY (%)
Mass & slots GGR
YoY (%)
FY15A
19,096
-35%
4,032
-49.3%
2,410
0.56
-57%
1.05
2,480
-12,710
(10,230)
599%
52%
FY15A
24,318
-36%
12,868
-46%
8,975
-21%
2,475
-22%
4,681
-44%
19.3%
FY15A
28.8
-34%
14.4
-45%
14.4
-19%
FY16E
21,724
14%
3,613
-10.4%
1,287
0.46
-18%
0.60
3,917
-6,611
(2,694)
1376%
75%
FY16E
27,858
15%
14,849
15%
9,986
11%
3,024
22%
4,951
6%
17.8%
FY16E
27.7
-4%
12.5
-13%
15.3
6%
FY17E
28,624
32%
6,107
69.0%
1,950
0.38
-18%
0.60
8,027
-875
7,152
2532%
115%
FY17E
36,725
32%
18,640
26%
13,474
35%
4,612
53%
6,328
28%
17.2%
FY17E
30.1
9%
13.0
4%
17.1
12%
FY18E
30,901
8%
7,316
19.8%
3,205
0.62
64%
0.60
7,445
-875
6,570
2126%
275%
FY18E
39,043
6%
19,084
2%
15,199
13%
4,760
3%
7,537
19%
19.3%
FY18E
32.1
6%
13.3
2%
18.8
10%
Valuation and price target basis

Our Dec-17 price target of HK$14.5 is derived from a DCF methodology,
assuming 7.3% WACC and 3% terminal growth and a 50% discount to
terminal value. Our PT implies 17x EV/EBITDA on 2017E but 14x on 2018E.
Breakdown of our DCF-based price target
HK$
Value (mn)
FCFs in '17-22E
33,512
Terminal value
69,946
Less: '17E net debt
-28,321
Fair value
75,137
Implied EV/EBITDA - 2017E
2018E
Per-share
6.5
13.5
-5.5
14.5
16.9 x
13.8 x
% of total
45%
93%
-38%
100%
Source: Bloomberg, Company data and J.P. Morgan estimates.
JPMe vs. consensus

Adj. EBITDA (HK$ m)
JPMe
Consensus
Difference %
FY17E
6,328
6,765
-6%
FY18E
7,537
7,325
3%
Dividend yield (%)

FY17E
FY18E
5.8%
5.8%
1.5%
1.6%
5.2%
5.2%
1.3%
2.2%
3.9%
3.9%
3.8%
3.8%
3.0%
2.8%
YTD
Stock perf.
29%
33%
28%
52%
-1%
1%
-10%
Source: Company data and J.P. Morgan estimates.
Comparative metrics
Sands China
Wynn Macau
MGM China
SJM Holdings
Melco Crown Entertainment
Melco International
Price
LC
34.6
32.8
11.6
14.7
5.4
17.0
Mkt Cap
US$ Mn
35.9
18.1
7.8
7.2
4.0
8.4
Source: Bloomberg, J.P. Morgan estimates. Prices are as of 14 Nov, 2016.
24
P/E (x)
FY17E
FY18E
20.5
18.0
20.2
18.4
30.8
18.7
24.4
22.5
12.9
19.5
20.1
19.9
NA
NA
EV/EBITDA (x)
FY17E
15.3
11.5
14.5
15.7
10.8
10.5
NA
FY18E
13.7
10.8
11.8
11.2
9.4
9.6
NA
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Table 11: Wynn Macau: Summary of our forecasts

(HK$m)
2013
Gross revenues
41,607
YoY (%)
9%
Wynn Macau & Encore
41,607
YoY (%)
9%
Wynn Palace
YoY (%)
Adjusted EBITDA
8,867
YoY (%)
15%
Wynn Macau & Encore
10,115
YoY (%)
14%
Wynn Palace
YoY (%)
(Royalty fee)
-1,248
Adjusted EBITDA margin
21.3%
Wynn Macau & Encore
24.3%
Wynn Palace
Revenue forecasts by segment
Gross revenues
41,607
YoY (%)
9%
VIP
28,670
YoY (%)
9%
Mass table
7,841
YoY (%)
17%
Slot machine
1,905
YoY (%)
-1%
Non-gaming & etc
3,191
YoY (%)
2%
2014
38,241
-8%
38,241
-8%
2015
24,318
-36%
24,318
-36%
2016E
27,858
15%
22,240
-9%
5,618
-836
17.8%
23.1%
11.6%
2017E
36,725
32%
19,303
-13%
17,422
210%
6,328
28%
4,627
-10%
2,803
330%
-1,102
17.2%
24.0%
16.1%
2018E
39,043
6%
19,387
0%
19,656
13%
7,537
19%
4,754
3%
3,955
41%
-1,171
19.3%
24.5%
20.1%
2019E
40,665
4%
19,573
1%
21,092
7%
8,317
10%
4,833
2%
4,704
19%
-1,220
20.5%
24.7%
22.3%
8,423
-5%
9,571
-5%
4,681
-44%
5,412
-43%
4,951
6%
5,135
-5%
651
-1,148
22.0%
25.0%
-731
19.3%
22.3%
38,241
-8%
23,663
-17%
9,368
19%
2,041
7%
3,169
-1%
24,318
-36%
12,868
-46%
7,507
-20%
1,468
-28%
2,475
-22%
27,858
15%
14,849
15%
8,535
14%
1,451
-1%
3,024
22%
36,725
32%
18,640
26%
11,356
33%
2,118
46%
4,612
53%
39,043
6%
19,084
2%
12,893
14%
2,305
9%
4,760
3%
40,665
4%
19,364
1%
13,836
7%
2,516
9%
4,950
4%
Figure 47: Wynn Macau: Revenue split by segment

100%
8%
80%
23%
8%
30%
10%
37%
11%
13%
69%
62%
20%
12%
12%
100%
16%
16%
80%
36%
37%
60%
40%
Figure 48: Wynn Macau: EBITDA split by segment
39%
40%
60%
41%
50%
40%
53%
53%
51%
49%
48%
20%
43%
34%
0%
0%
2013
2014
VIP
2015
2016E
Mass & slot
2017E
Non-gaming
2018E
2019E
2013
2014
VIP
20%
19%
24%
21%
20%
62%
58%
55%
57%
58%
18%
23%
21%
22%
22%
2015
2016E
2017E
2018E
2019E
Mass & slot
Non-gaming
25
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Figure 49: Wynn Macau: EBITDA vs.capex & dvidend
Figure 50: Wynn Macau: Net debt and net debt/EBITDA

(USDm)
5,000
(US$m)
2,500
8.0x
7.0x
6.0x
5.0x
4.0x
3.0x
2.0x
1.0x
0.0x
-1.0x
4,000
2,000
3,000
1,500
2,000
1,000
1,000
500
0
-1,000
0
2013
2014
2015
Wynn : EBITDA
2013
2016E 2017E 2018E 2019E

Capex
Shareholder return
2014
2015
2016E
Wynn net debt (LHS)
2017E
2018E
2019E
Wynn net debt(cash)/EBITDA (RHS)
Table 12: Wynn Macau: DCF analysis (7.3% WACC, 3% terminal growth)
(HK$ m)
Gross revenues
YoY (%)
EBITDA
YoY (%)
Margin (%)
(Capex)
Capex as % of revenues
(Income tax and others)
PV of FCF
(HK$ m)
Enterprise value
Less: concession risk adjustment
Less: net debt
Equity value
# of shares (Millions)
Fair value per share (HK$/shr)
Implied EV/EBITDA at PT (x) 2017E
2018E
2017E
36,725
32%
6,107
69%
16.6%
1,825
-875
2.4%
-1,018
6,040
6,040
Value
173,404
-69,946
-28,321
75,137
5,182
14.50
16.9
13.8
Recurring FCF yield at PT (x) 2017E

2018E
8.0%
7.4%
Current price (HK$/share)

Upside %
26
11.6
25%
2018E
2019E
39,043
40,665
6%
4%
7,316
8,093
20%
11%
18.7%
19.9%
38
-223
-875
-1,000
2.2%
2.5%
-947
-871
5,532
5,998
5,158
5,213
Comments
Sum of all present values
50% discount on terminal value
End-2017E
2020E
41,914
3%
8,683
7%
20.7%
198
-1,000
2.4%
-764
7,117
5,767
2021E
43,377
3%
9,051
4%
20.9%
-100
-1,000
2.3%
-611
7,340
5,545
2022E
44,891
3%
9,411
4%
21.0%
450
-1,000
2.2%
-641
8,220
5,789
Terminal
Value
198,625
139,892
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Wynn Macau: Summary of Financials

Profit and Loss Statement
HK$ in millions, year end Dec
Gross revenues
VIP gaming
Mass gaming (including slots)
Non-gaming
(Rebates & promo allowances)
Reported revenue
(Gaming taxes & premiums)
(Other operating expenses)
Adjusted EBITDA
(Pre-opening, stock option & others)
EBITDA
(D&A)
EBIT
Net interest income / (expense)
Other income / (expense)
Pretax income
(Income tax)
Net Income
FY14A
38,241
23,663
11,409
3,169
(8,796)
29,445
(13,885)
(5,933)
8,423
(471)
7,952
(986)
6,966
(457)
6,469
(24)
6,445
FY15A
24,318
12,868
8,975
2,475
(5,222)
19,096
(8,701)
(5,481)
4,681
(649)
4,032
(1,000)
3,032
(564)
2,417
(6)
2,410
Shares Outstanding (Millions)

.
EPS (HK$)
DPS (HK$)
Payout ratio
5,188
5,187
1.24
0.70
56%
0.46
1.05
226%
Core EPS (ex-one offs) (HK$)

Core EBITDA (ex-one offs)
Cashflow Statement
Net profit
Depreciation & amortization
(Change in working capital)
Others
Cashflow from operations
.
Capex
Maintenance
Expansionary
Others
Cashflow from investments
a.
Change in borrowings
Dividends paid
Others
Cashflow from financing
1.30
8,218
0.56
4,469
FCF to the firm

YoY change
Recurring FCF to equity
YoY change
FY14A FY15A
6,445 2,410
986 1,000
(2,377) (1,755)
703
825
5,758 2,480
Balance Sheet
FY16E FY17E FY18E HK$ in millions, year end Dec
27,858 36,725 39,043 Cash and cash equivalents
14,849 18,640 19,084 Receivable
9,986 13,474 15,199 Inventories
3,024
4,612 4,760 Other current assets
(6,134) (8,102) (8,142) Current assets
21,724 28,624 30,901 Net fixed assets
(9,893) (12,792) (13,656) Intangibles and goodwill
(7,372) (8,697) (8,888) Other non-current assets
4,951
6,328 7,537 Total assets
(1,338)
(221)
(221) a.
3,613
6,107 7,316 Payables
(1,500) (3,065) (3,065) Short-term debt
2,113
3,042 4,251 Others
(822) (1,087) (1,038) Current liabilities
- Long-term debt
1,291
1,955 3,213 Other long-term liabilities
(3)
(5)
(9) Total liabilities
1,287
1,950 3,205 Minority interests (MI)
Shareholders' equity
5,182
5,182 5,182 Shareholders' equity and MI
a.
0.25
0.38
0.62 Gross debt
0.60
0.60
0.60 Net Debt/(cash)
242%
159%
97% a.
BVPS (HK$)
0.46
0.38
0.62
4,713
6,107 7,316
Ratio Analysis
FY16E FY17E FY18E HK$ in millions, year end Dec
1,287
1,950 3,205 Gross revenue growth
1,500
3,065 3,065 Adj. EBITDA growth
179
1,825
38 EBITDA growth
950
1,187 1,138 EBIT growth
3,917
8,027 7,445 EPS growth
(8,312) (12,710) (6,611)

(362)
(464) (350)
(7,950) (12,246) (6,261)
1,760
34
2
(6,552) (12,677) (6,609)
6,895 12,809 3,184
(8,716) (5,447) (3,112)
(718) (1,227) (956)
(2,538) 6,135 (883)
(2,554) (10,230) (2,694)
(136.1%) 300.5% (73.7%)
4,837 1,451 3,592
(50.6%) (70.0%) 147.6%
(875)
(875)
0
0
(875)
(875)
(875)
0
0
(875)
Margins (based on gross revenue)

Adj. EBITDA margin
EBITDA margin
EBIT margin
Net margin
0 (4,319) P/E (x)

(3,109) (3,109) Core P/E (x)
(1,018)
(944) Core EV/EBITDA (x)
(4,127) (8,372) Dividend yield
FCF yield
7,152 6,570 Recurring eFCF yield
(365.5%) (8.1%) Price/BV (x)
6,040 5,532
68.1% (8.4%) Net debt to equity (x)
Interest coverage (x)
ROE
Cash ROIC (EBITDA/invested capital)
FY14A FY15A FY16E FY17E FY18E

10,790 6,731 3,156 6,181 4,380
571
458
504 1,665 1,750
186
180
226
298
317
440
659
405
533
567
11,989 8,030 4,291 8,677 7,014
19,195 31,072 36,278 34,183 32,088
2,373 2,277 2,182 2,086 1,991
592
905 1,037 1,217 1,025
34,150 42,284 43,787 46,164 42,117
2,009 1,621 1,157 2,325 2,072
0
0
0
0
0
5,410 4,288 4,770 6,788 7,216
7,418 5,909 5,927 9,113 9,289
18,605 31,318 34,502 34,502 30,183
1,083
955 1,081 1,430 1,432
27,106 38,181 41,510 45,045 40,904
7,044 4,102 2,278 1,118 1,214
7,044 4,102 2,278 1,118 1,214
18,605 31,318 34,502 34,502 30,183
7,815 24,587 31,346 28,321 25,803
1.36
0.79
0.44
0.22
0.23
FY14A
(8.1%)
(5.0%)
(6.2%)
(10.8%)
(16.3%)
FY15A
(36.4%)
(44.4%)
(45.6%)
(56.5%)
(62.6%)
FY16E
14.6%
5.8%
5.5%
(30.3%)
(46.5%)
FY17E
31.8%
27.8%
29.6%
44.0%
51.5%
FY18E
6.3%
19.1%
19.8%
39.7%
64.4%
22.0%
21.5%
18.2%
17.7%
19.3% 17.8% 17.2% 19.3%

18.4% 16.9% 16.6% 18.7%
12.5% 7.6% 8.3% 10.9%
11.9% 8.6% 5.3% 8.2%
9.3
24.9
46.6
30.8
18.7
8.9
20.7
25.1
30.8
18.7
8.3
18.9
19.4
14.5
11.7
6.0% 9.1% 5.2% 5.2% 5.2%
(4.3%) (17.0%) (4.5%) 11.9% 10.9%
8.1% 2.4% 6.0% 10.1% 9.2%
8.5
14.6
26.3
53.7
49.4
1.1
6.0
13.8
25.3
21.3
18.4
8.3
6.0
5.8
7.3
83.1% 52.0% 74.8% 114.8% 274.8%
71.6% 17.7% 11.2% 18.6% 24.7%
27
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Galaxy Entertainment (Overweight; Price Target: HK$39.00)
Investment Thesis
We affirm our OW on Galaxy with a Dec-17 PT of HK$39.0. Galaxy is among our

top picks for Macau, because, at this level, we expect sizable returns from both
consensus upgrades and multiple re-rating.
Also, we believe Galaxy has the lowest risks among the six, with regards to: (1)
Valuation: its 11x 17E EV/EBITDA is one of the cheapest in the sector (average
13x), and 7-8% recurring FCF yield looks very attractive. (2) Estimates: we see
good double-digit upside to consensus EBITDA for FY17E-18E, and we think the
market is overly concerned about its market share loss into new openings. (3)
Execution: most investors seem to be already disappointed by Phase II and believe
ramp-up is over, which we think leaves little room for further disappointment.
In the long run, its solid balance sheet (HK$14b net-cash at 16E), strong CFs
(recurring FCF of HK$10bn p.a.) and undeveloped landbank (for Phase III/IV)
provide the company with substantial growth optionality.
Valuation
Our Dec-17 PT of HK$39.0 is derived from a DCF methodology, assuming an 8.7%
WACC, 3% terminal growth and a 50% discount to terminal value. Our PT implies a
reasonable 14x and 13x EV/EBITDA for 2017E and 2018E, respectively.
Downside risks include: (1) Rmb devaluation could dampen gaming demand from
China & could further tighten liquidity within the junket system; (2) Unfavorable
regulatory changes (e.g., China capital outflow control, junket industry regulation,
full smoking ban, potential costs associated with concession renewal, etc.); (3)
Stronger-than-expected competitive pressure from new Cotai casinos.
Company Data
52-week Range (HK$)
Market Cap (HK$ mn)
Market Cap ($ mn)
Shares O/S (mn)
Price (HK$)
Date Of Price
33.30-19.69
139,818
18,021
4,263
32.80
14 Nov 16
18.62
545.48
31-Dec-17
Galaxy Entertainment Group Limited (Reuters: 0027.HK, Bloomberg: 27 HK)

FY14A
FY15A
FY16E
FY17E
Revenue (HK$ mn)
71,752
50,991
51,589
53,549
13,223
8,736
9,905
11,008
EBITDA (HK$ mn)
12,337
7,224
9,390
10,518
Net Profit (HK$ mn)
10,340
4,161
5,750
6,924
DPS (HK$)
0.73
0.29
0.40
0.49
Core EPS (HK$)
2.51
1.23
1.35
1.62
Dividend Yield
2.2%
0.9%
1.2%
1.5%
Core P/E (x)
13.1
26.6
24.2
20.2
Core EV/EBITDA (x)
10.2
16.1
13.5
11.5
28
FY18E
54,588
11,670
11,030
7,464
0.53
1.79
1.6%
18.4
10.8
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Profit ramp up of Galaxy Macau Phase II and

Broadway Macau
share price for the sector
Quickerthan-expected ramp up of GM Phase II and Broadway

Macau
Faster-than-expected recovery in gaming demand
New positive policy (such as further visa policy loosening) led
strong momentum

China & could further tighten liquidity within junket
system
Unfavorable regulatory changes (e.g. China capital
ban, etc.)
new Cotai casinos
External factors affecting tourist arrival such as natural
disasters, pandemics, geopolitical disputes, accidents,
etc.

Revenues
Revenue growth (%)
EBITDA (reported)
EBITDA margin (%)
Net profit
EPS (HK$)
EPS growth (%)
DPS (HK$)
Operating cash flow
Capex
Free cash flow
Net debt/equity (%)
ROE (%)
Key assumptions (HK$m)
Gross revenues
YoY (%)
VIP
YoY (%)
Mass & slots
YoY (%)
YoY (%)
Adjusted EBITDA
YoY (%)
Industry assumptions (US$m)
YoY (%)
VIP GGR
YoY (%)
Mass & slots GGR
YoY (%)
FY15A
50,991
-29%
7,224
14.2%
4,161
1.23
-51%
0.29
6,626
-7,191
(566)
-17%
13%
FY15A
50,991
-29%
28,444
-42%
17,771
-3%
4,776
17%
8,736
-34%
17.1%
FY15A
28.9
-34%
14.4
-45%
14.5
-18%
FY16E
51,589
1%
9,390
18.2%
5,750
1.35
10%
0.40
10,690
-2,700
7,990
-30%
13%
FY16E
51,589
1%
25,266
-11%
20,942
18%
5,381
13%
9,905
13%
19.2%
FY16E
28.8
-34%
14.4
-45%
14.4
-19%
FY17E
53,549
4%
10,518
19.6%
6,924
1.62
20%
0.49
10,990
-2,950
8,040
-39%
14%
FY17E
53,549
4%
25,592
1%
22,516
8%
5,441
1%
11,008
11%
20.6%
FY17E
27.7
-4%
12.5
-13%
15.3
6%
FY18E
54,588
2%
11,030
20.2%
7,464
1.79
10%
0.53
11,154
-8,750
2,404
-35%
14%
FY18E
54,588
2%
25,592
0%
23,074
2%
5,922
9%
11,670
6%
21.4%
FY18E
30.1
9%
13.0
4%
17.1
12%

Our Dec-17 PT of HK$39.0 is derived from a DCF methodology,
assuming an 8.7% WACC, 3% terminal growth and a 50% discount to
terminal value. Our PT implies a reasonable 14x and 13x EV/EBITDA
for 2017E and 2018E, respectively.
HK$
Value (mn) Per-share % of total
FCFs in '17-22E
47,007
11.0
28%
Terminal value
99,615
23.4
60%
'17E net cash
19,626
4.6
12%
Fair value
166,248
39.0
100%
14.0 x
2018E
13.2 x
JPMe vs. consensus

EBITDA
JPMe
Consensus
Difference %
FY17E
11,008
10,042
10%
FY18E
11,670
10,753
9%
Dividend yield (%)

FY17E
FY18E
5.8%
5.8%
1.5%
1.6%
5.2%
5.2%
1.3%
2.2%
3.9%
3.9%
3.8%
3.8%
3.0%
2.8%
YTD
Stock perf.
29%
33%
28%
52%
-1%
1%
-10%
Comparative metrics
Sands China
Wynn Macau
MGM China
SJM Holdings
Melco International
Price
LC
34.6
32.8
11.6
14.7
5.4
17.0
Mkt Cap
US$ Mn
35.9
18.1
7.8
7.2
4.0
8.4
P/E (x)
FY17E
FY18E
20.5
18.0
20.2
18.4
30.8
18.7
24.4
22.5
12.9
19.5
20.1
19.9
NA
NA
EV/EBITDA (x)
FY17E
FY18E
15.3
13.7
11.5
10.8
14.5
11.8
15.7
11.2
10.8
9.4
10.5
9.6
NA
NA
Source: Bloomberg, J.P. Morgan estimates. Prices are as of 14 Nov 2016
29
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Table 13: Galaxy: Summary of our forecasts

(HK$m)
2013
Gross revenues
66,032
YoY (%)
16%
Galaxy Macau
39,921
YoY (%)
21%
StarWorld
23,518
YoY (%)
9%
Broadway
YoY (%)
G/M Phase III
Others
2,593
Adjusted EBITDA
12,575
YoY (%)
28%
Galaxy Macau
8,839
YoY (%)
36%
StarWorld
3,692
YoY (%)
14%
Broadway
YoY (%)
Adj EBITDA margin
19.0%
Galaxy Macau
22.1%
StarWorld
15.7%
Broadway
Gross revenues
66,032
YoY (%)
16%
VIP
45,567
YoY (%)
10%
Mass table
14,324
YoY (%)
47%
Slot machine
1,724
YoY (%)
18%
Non-gaming & others
4,417
YoY (%)
8%
2014
71,752
9%
46,915
18%
22,634
-4%
2015
50,991
-29%
35,502
-24%
13,039
-42%
425
2016E
51,589
1%
37,570
6%
11,151
-14%
687
62%
2017E
53,549
4%
38,863
3%
11,719
5%
684
0%
19.2%
21.9%
18.1%
3.6%
2,283
11,008
11%
9,192
12%
2,106
4%
33
37%
20.6%
23.7%
18.0%
4.9%
2018E
54,588
2%
39,570
2%
11,761
0%
756
11%
0
2,501
11,670
6%
9,735
6%
2,149
2%
65
96%
21.4%
24.6%
18.3%
8.6%
2019E
62,630
15%
39,463
0%
11,263
-4%
790
4%
8,374
2,740
13,060
12%
10,217
5%
2,284
6%
74
13%
20.9%
25.9%
20.3%
9.3%
2,203
13,223
5%
9,871
12%
3,458
-6%
2,025
8,736
-34%
6,946
-30%
2,185
-37%
-7
2,181
9,905
13%
8,224
18%
2,019
-8%
24
18.4%
21.0%
15.3%
17.1%
19.6%
16.8%
-1.6%
71,752
9%
49,424
8%
16,446
15%
1,757
2%
4,125
-7%
50,991
-29%
28,444
-42%
16,030
-3%
1,741
-1%
4,776
16%
51,589
1%
25,266
-11%
19,037
19%
1,905
9%
5,381
13%
53,549
4%
25,592
1%
20,389
7%
2,127
12%
5,441
1%
54,588
2%
25,592
0%
20,906
3%
2,168
2%
5,922
9%
62,630
15%
27,739
8%
24,096
15%
2,920
35%
7,874
33%
Figure 51: Galaxy: Revenue split by segment

100%
7%
6%
80%
24%
25%
9%
35%
60%
40%
69%
69%
20%
10%
Figure 52: Galaxy: EBITDA split by segment

10%
11%
13%
9%
9%
50%
52%
11%
14%
12%
13%
12%
65%
65%
66%
66%
68%
24%
21%
22%
21%
20%
2015
2016E
2017E
2018E
2019E
80%
41%
42%
42%
43%
60%
40%
56%
49%
48%
47%
44%
0%
20%
41%
38%
0%
2013
2014
VIP
2015
Mass & slot
2016E
2017E
2018E
Non-gaming & etc
30
100%
2019E
2013
2014
VIP
Mass & slot
Non-gaming & etc
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Figure 53: Galaxy: EBITDA vs. capex & dividend
Figure 54: Galaxy: Net debt and net debt/EBITDA
(US$m)
2,000
(USDm)
0
1,500
-1,000
0.0x
-500
-0.5x
-1,500
1,000
-1.0x
-2,000
-2,500
500
-1.5x
-3,000
-3,500
0
2013
2014
2015
Galaxy : EBITDA
-2.0x
2013
2016E 2017E 2018E 2019E

Capex
Shareholder return
2014
2015
2016E
Gxy net debt (LHS)
2017E
2018E
2019E
Gxy net debt (cash)/EBITDA (RHS)
Table 14: Galaxy: DCF analysis (8.7% WACC, 3% terminal growth)

(HK$m)
Gross revenues
YoY (%)
EBITDA
YoY (%)
Margin (%)
(Capex)
PV of FCF
(HK$ mn)
Enterprise value
Add: net cash
Equity value
Fair value per share (HK$/share)
2018E
2018E
Upside %
2017E 2018E 2019E 2020E

53,549 54,588 62,630 65,351
4%
2%
15%
4%
10,518 11,030 11,870 14,209
12%
5%
8%
20%
19.6% 20.2% 19.0% 21.7%
535
207
-400
654
-2,950 -8,750 -5,900 -1,250
5.5% 16.0%
9.4%
1.9%
52
79
94
129
8,154
2,566
5,664 13,743
8,154
2,361
4,796 10,709
Comments
246,238 Sum of all present values
-99,615 50% discount on terminal value
19,626 End-2017E
166,248
4,263
39.00
14.0
13.2
2021E
68,292
4%
15,190
7%
22.2%
-100
-1,250
1.8%
133
13,973
10,020
Terminal
2022E
Value
71,365
4%
16,231
7%
22.7%
1,500
-1,250
1.8%
137
16,618 301,918
10,966 199,231
6.2%
6.4%
32.8
19%
31
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Galaxy Entertainment: Summary of Financials

Gross revenues
VIP gaming
Non-gaming
(Marketing and promotional expense)
Adjusted EBITDA
EBITDA
(D&A)
EBIT
Pretax income
(Income tax)
Profit after tax
(Minority interest)
Net Income
.
EPS (HK$)
DPS (HK$)
Payout ratio
Cashflow Statement
Net profit
Others
.
Capex
Maintenance
Expansionary
Others
a.
Dividends paid
Others
FCF to the firm
YoY change
YoY change
FY14A
71,752
49,424
18,203
4,125
(22,214)
(26,565)
(9,751)
13,223
(886)
12,337
(1,884)
10,452
156
10,564
(202)
10,363
(23)
10,340
FY15A
50,991
28,444
17,771
4,776
(12,540)
(18,233)
(11,482)
8,736
(1,512)
7,224
(3,086)
4,137
85
4,209
(82)
4,126
35
4,161
4,239
4,256
4,263
4,263
4,263
2.44
0.73
30%
0.98
0.29
30%
1.35
0.40
30%
1.62
0.49
30%
1.75
0.53
30%
2.51
12,775
1.23
8,291
1.35
1.62
1.79
9,415 10,518 11,180
FY14A
10,363
1,884
(186)
(41)
12,020
FY15A
4,126
3,086
(833)
246
6,626
FY16E FY17E FY18E

5,715 6,889 7,429
3,680 3,680 3,680
1,353
535
207
(58) (114) (162)
10,690 10,990 11,154
Balance Sheet
Cash and cash equivalents
Short term investments
Receivable
Inventories
Other current assets
Current assets
Net fixed assets
Intangibles and goodwill
Other non-current assets
Total assets
a.
Payables
Short-term debt
Others
Current liabilities
Long-term debt
Other long-term liabilities
Total liabilities
Minority interests (MI)
Shareholders' equity and MI
a.
Gross debt
Net Debt/(cash)
a.
BVPS (HK$)
Ratio Analysis
Gross revenue growth
Adj. EBITDA growth
EBITDA growth
EBIT growth
EPS growth
(9,303) (7,191)
(2,003)
(491)
(7,300) (6,700)
900
1,439
(8,403) (5,752)
(2,700) (2,950) (8,750) Margins (based on gross revenue)

(700) (750) (750) Adj. EBITDA margin
(2,000) (2,200) (8,000) EBITDA margin
0
0
0 EBIT margin
(2,700) (2,950) (8,750) Net margin
342
433
(4,879) (1,788)
217
158
(4,319) (1,197)
(719) (671)
0
(1,407) (1,996) (2,158)
58
114
162
(2,068) (2,554) (1,997)
2,716
(566)
7,990 8,040
(52.8%) (120.8%) (1512.0%) 0.6%
11,113
6,981
10,073 10,354
24.3% (37.2%)
44.3% 2.8%
32
FY16E FY17E FY18E

51,589 53,549 54,588
25,266 25,592 25,592
20,942 22,516 23,074
5,381 5,441 5,922
(10,591) (10,613) (10,613)
(18,231) (18,980) (19,200)
(12,862) (12,948) (13,105)
9,905 11,008 11,670
(515) (490) (640)
9,390 10,518 11,030
(3,680) (3,680) (3,680)
5,710 6,838 7,350
88
134
162
5,798 6,972 7,512
(82)
(82)
(82)
5,715 6,889 7,429
35
35
35
5,750 6,924 7,464
FY14A
9,040
1,315
1,982
143
346
12,827
30,422
6,721
1,869
51,839
FY15A
7,718
724
2,184
151
423
11,199
35,691
6,463
2,002
55,354
FY16E
13,640
724
1,709
153
428
16,654
35,031
6,381
1,987
60,053
FY17E
19,126
500
1,624
158
444
21,853
34,622
6,299
1,987
64,761
FY18E
19,534
0
1,656
161
453
21,804
40,012
6,217
2,248
70,282
11,112
412
60
11,583
576
690
12,850
620
38,369
38,989
11,458
719
68
12,245
671
725
13,641
612
41,101
41,713
12,342
0
69
12,411
671
948
14,031
577
45,445
46,022
12,811
0
72
12,883
0
963
13,846
542
50,372
50,915
13,060
0
73
13,133
0
963
14,096
508
55,678
56,186
988 1,390
671
0
0
(9,367) (7,051) (13,692) (19,626) (19,534)
9.05
9.66
10.66
FY14A FY15A FY16E

8.7% (28.9%) 1.2%
5.1% (33.9%) 13.4%
3.4% (35.1%) 13.6%
(0.2%) (60.4%) 38.0%
2.1% (59.9%) 38.0%
11.82
13.06
FY17E FY18E
3.8% 1.9%
11.1% 6.0%
11.7% 6.3%
19.8% 7.5%
20.4% 7.8%
18.4% 17.1% 19.2% 20.6% 21.4%

17.8% 16.3% 18.2% 19.6% 20.5%
14.6% 8.1% 11.1% 12.8% 13.5%
14.8% 10.3% 11.2% 12.9% 13.9%
P/E (x)
13.4
33.5
24.3
20.2
18.7
Core P/E (x)
13.1
26.6
24.2
20.2
18.4
Core EV/EBITDA (x)
10.2
16.1
13.5
11.5
10.8
Dividend yield
2.2% 0.9% 1.2% 1.5% 1.6%
FCF yield
2.0% (0.4%) 5.7% 5.8% 1.7%
2,404 Recurring eFCF yield
8.0% 5.0% 7.2% 7.4% 7.7%
(70.1%) Price/BV (x)
3.6
3.4
3.1
2.8
2.5
10,716
3.5% Net debt to equity (x)
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
ROE
30.0% 13.2% 13.3% 14.5% 14.4%
Cash ROIC (EBITDA/invested capital) 46.3% 22.0% 27.3% 32.1% 31.6%
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
MGM China
MGM China (Overweight; Price Target: HK$17.00)
Investment Thesis
Despite the YTD outperformance, we rate MGM OW. We believe MGM offers an
attractive balance of strong execution, substantial multi-year profit growth, and
attractive medium-term valuation, which collectively position the stock strongly for
an upcycle in industry demand into 2017.
More specifically, our estimates suggest: (a) substantial 50%+ growth in EBITDA
over FY16-18, representing a +24% cagr vs. the industry average of +14%; (b)
sizable >10% upside to consensus EBITDA; and (c) compelling medium-term
valuation at 11x EV/EBITDA on 2018E (or 9x on 2019E).
Valuation
Our Dec-2017 PT of HK$17.0 is derived from DCF methodology, assuming 7.1%

WACC and 3% terminal growth. Our PT implies 13x EV/EBITDA on 2018E, which
looks reasonable, if not conservative, to us.
Upside risks include: 1) Larger-than-expected table allocation for MGM Cotai (we
modeled 125 tables open the opening); 2) Earlier-than-expected opening of MGM
Cotai (JPMe June-2017E); 3) Stronger-than-expected improvement in industry
demand
Downside risks include: (1) Delay in Cotai opening; (2) RMB devaluation could
dampen gaming demand from China & could further tighten liquidity within the
junket system; (3) Unfavorable regulatory changes (e.g., China capital control, junket
regulation, full smoking ban, potential costs associated with concession renewal,
etc.); (4) Stronger-than-expected competitive pressure from new Cotai casinos.
Company Data
52-week Range (HK$)
Market Cap (HK$ mn)
Market Cap ($ mn)
Shares O/S (mn)
Price (HK$)
Date Of Price
15.22-7.83
55,936
7,210
3,800
14.72
14 Nov 16
5.63
72.98
31-Dec-17
MGM China Holdings Ltd (Reuters: 2282.HK, Bloomberg: 2282 HK)

FY14A
FY15A
FY16E
Revenue (HK$ mn)
25,454
17,170
14,785
6,663
4,257
4,051
EBITDA (HK$ mn)
6,568
4,086
3,811
Net Profit (HK$ mn)
5,707
3,113
2,879
DPS (HK$)
1.34
0.25
0.23
Core EPS (HK$)
1.51
0.85
0.80
Dividend Yield
9.1%
1.7%
1.5%
Core P/E (x)
9.7
17.4
18.4
Core EV/EBITDA (x)
8.5
14.9
17.5
FY17E
18,035
4,643
3,695
1,433
0.19
0.60
1.3%
24.4
15.7
FY18E
22,386
6,125
6,040
2,489
0.33
0.65
2.2%
22.5
11.2
33
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512

Larger-than-expected table allocation from government upon the new

property opening (We modeled 250 additional tables)
Earlier-than-expected opening of MGM Cotai (JPMe 2Q17)
New positive policy (such as further visa policy loosening) led strong
momentum
Delay in opening of MGM Cotai

system.
ban, etc.)
new Cotai casinos

Reported revenues (net)
Revenue growth (%)
EBITDA
EBITDA margin (%)
Net profit
EPS (HK$)
EPS growth (%)
DPS (HK$)
Operating cash flow
Capex
Free cash flow
Net debt/equity (%)
ROE (%)
Gross revenues
YoY (%)
VIP
YoY (%)
Mass & slots
YoY (%)
YoY (%)
Adjusted EBITDA
YoY (%)
YoY (%)
VIP GGR
YoY (%)
Mass & slots GGR
YoY (%)
FY15A
17,170
-33%
4,086
23.8%
3,113
0.85
-44%
0.25
3,210
-4585
(1,376)
128%
57%
FY15A
21,971
-36%
11,737
-45%
9,169
-21%
1,065
-8%
4,257
-36%
19.4%
FY15A
28.9
-34%
14.7
-44%
14.2
-20%
FY16E
14,785
-14%
3,811
25.8%
2,879
0.80
-6%
0.23
3,731
-9455
(5,724)
190%
51%
FY16E
18,369
-16%
8,238
-30%
9,132
0%
999
-6%
4,051
-5%
22.1%
FY16E
27.7
-4%
12.5
-15%
15.3
7%
FY17E
18,035
22%
3,695
20.5%
1,433
0.60
-24%
0.19
4,330
-5126
(797)
198%
31%
FY17E
21,437
17%
7,043
-15%
12,315
35%
2,079
108%
4,643
15%
21.7%
FY17E
30.1
9%
13.0
4%
17.1
12%
FY18E
22,386
24%
6,040
27.0%
2,489
0.65
8%
0.33
5,966
-620
5,346
126%
29%
FY18E
26,061
22%
7,255
3%
15,616
27%
3,190
53%
6,125
32%
23.5%
FY18E
32.1
6%
13.3
2%
18.8
10%
P/E (x)
FY17E
20.5
20.2
30.8
24.4
12.9
20.1
NA
FY18E
18.0
18.4
18.7
22.5
19.5
19.9
NA

Our Dec-2017 PT of HK$17.0 is derived from DCF methodology,
assuming 7.1% WACC and 3% terminal growth. Our PT implies 13x
EV/EBITDA on 2018E, which looks reasonable, if not conservative,
to us.

HK$
FCFs in '17-22E
21,244
5.6
33%
Terminal value
58,795
15.5
91%
Less: '17E net debt
-15,429
-4.1
-24%
Fair value
64,611
17.0
100%
17.6 x
2018E
12.6 x
JPMe vs. consensus

EBITDA (HK$ m)
JPMe
Consensus
Difference %
FY17E
4,643
4,471
4%
FY18E
6,125
5,871
4%
Dividend yield (%)

FY17E
FY18E
5.8%
5.8%
1.5%
1.6%
5.2%
5.2%
1.3%
2.2%
3.9%
3.9%
3.8%
3.8%
3.0%
2.8%
YTD
Stock perf.
29%
33%
28%
52%
-1%
1%
-10%
Comparative metrics
Sands China
Wynn Macau
MGM China
SJM Holdings
Melco International
Price
LC
34.6
32.8
11.6
14.7
5.4
17.0
Mkt Cap
US$ Mn
35.9
18.1
7.8
7.2
4.0
8.4
34
EV/EBITDA (x)
FY17E
FY18E
15.3
13.7
11.5
10.8
14.5
11.8
15.7
11.2
10.8
9.4
10.5
9.6
NA
NA
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Table 15: MGM China: Summary of our forecasts

(HK$m)
2013
2014
Gross revenues
35,737
34,093
YoY (%)
18%
-5%
MGM Macau
35,737
34,093
YoY (%)
18%
-5%
MGM Cotai
YoY (%)
Adjusted EBITDA (before royalty and
6,645
corporate
7,105
exp)
YoY (%)
20%
7%
MGM Macau
6,645
7,105
YoY (%)
20%
7%
MGM Cotai
YoY (%)
18.6%
20.8%
MGM Macau
18.6%
20.8%
MGM Cotai
Gross revenues
35,737
34,093
YoY (%)
18%
-5%
VIP
25,244
21,373
YoY (%)
17%
-15%
Mass table
7,119
9,528
YoY (%)
26%
34%
Slot machine
2,263
2,032
YoY (%)
8%
-10%
Non-gaming & etc
1,111
1,160
YoY (%)
6%
4%
2015
21,971
-36%
21,971
-36%
2016E
18,369
-16%
18,369
-16%
2017E
21,437
17%
17,066
-7%
4,371
23.8%
24.9%
19.7%
2018E
26,061
22%
17,229
1%
8,832
102%
6,679
31%
4,265
0%
2,413
180%
25.6%
24.8%
27.3%
2019E
27,676
6%
17,242
0%
10,434
18%
7,454
12%
4,232
-1%
3,222
34%
26.9%
24.5%
30.9%
4,669
-34%
4,669
-34%
4,435
-5%
4,435
-5%
5,109
15%
4,248
-4%
861
21.3%
21.3%
24.1%
24.1%
21,971
-36%
11,737
-45%
7,557
-21%
1,612
-21%
1,065
-8%
18,369
-16%
8,238
-30%
7,897
4%
1,235
-23%
999
-6%
21,437
17%
7,043
-15%
10,687
35%
1,628
32%
2,079
108%
26,061
22%
7,255
3%
13,574
27%
2,042
25%
3,190
53%
27,676
6%
7,255
0%
14,646
8%
2,230
9%
3,545
11%
Figure 55: MGM China: Revenue split by segment

100%
3%
3%
80%
26%
34%
5%
42%
60%
40%
71%
63%
20%
5%
10%
Figure 56: MGM China: EBITDA split by segment

12%
13%
2014
VIP
5%
5%
8%
8%
11%
14%
15%
74%
78%
79%
78%
78%
80%
50%
57%
60%
61%
60%
55%
66%
40%
53%
45%
33%
28%
26%
2017E
2018E
2019E
0%
2013
100%
2015
2016E
Mass & slot
Non-gaming
20%
40%
29%
0%
2013
2014
VIP
19%
14%
10%
8%
7%
2015
2016E
2017E
2018E
2019E
Mass & slot
Non-gaming
35
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Figure 57: MGM China: EBITDA vs. capex & dividend
Figure 58: MGM China: Net debt and net debt/EBITDA

(US$ m)
2,500
(US$m)
1,500
4.0x
2,000
1,200
3.0x
1,500
900
1,000
2.0x
600
500
1.0x
300
0.0x
-500
-1,000
0
2013
2014
2015
MGM : EBITDA
-1.0x
2013
2016E 2017E 2018E 2019E

Capex
Shareholder return
2014
2015
2016E
MGM net debt (LHS)
2017E
2018E
2019E
MGM net debt(cash)/EBITDA (RHS)
Table 16: MGM China: DCF analysis (7.1% WACC, 3% terminal growth)
(HK$m)
Gross revenues
YoY (%)
EBITDA
YoY (%)
Margin (%)
(Capex)
PV of FCF
(HK$ mn)
Enterprise value
Less: net debt
Equity value
Implied EV/EBITDA at PT(x) 2017E
2018E
2017E
21,437
17%
3,695
-3%
17.2%
841
-5,126
23.9%
-900
-1,491
-1,491
Value
138,834
-58,795
-15,429
64,611
3,800
17.00
17.6
12.6

2018E
Upside %
5.9%
7.1%
14.7
16%
36
2018E
2019E
2020E
26,061
27,676
28,548
22%
6%
3%
6,040
6,783
7,151
63%
12%
5%
23.2%
24.5%
25.0%
138
-10
170
-620
-659
-853
2.4%
2.4%
3.0%
-980
-874
-724
4,577
5,241
5,744
4,274
4,571
4,678
Comments
End-2017E
2021E
29,833
4%
7,592
6%
25.4%
-5
-853
2.9%
-746
5,988
4,555
2022E
31,175
4%
8,027
6%
25.7%
150
-853
2.7%
-768
6,556
4,657
Terminal
Value
165,537
117,590
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
MGM China: Summary of Financials

Gross revenues
VIP gaming
Non-gaming
(Rebates & promo allowances)
Reported revenue
Adj. property EBITDA (reported)
Corporate Expense
Adjusted EBITDA
EBITDA
(D&A)
EBIT
Pretax income
(Income tax)
Net Income
.
EPS (HK$)
DPS (HK$)
Payout ratio
Cashflow Statement
Net profit
Others
.
Capex
Maintenance
Expansionary
Others
a.
Dividends paid
Others
FCF to the firm
YoY change
YoY change
FY14A
34,093
21,373
11,561
1,160
(8,639)
25,454
(13,003)
(5,347)
7,105
(442)
6,663
(95)
6,568
(800)
5,769
(25)
5,723
(16)
5,707
FY15A
21,971
11,737
9,169
1,065
(4,801)
17,170
(8,306)
(4,196)
4,669
(412)
4,257
(171)
4,086
(806)
3,281
(133)
3,129
(17)
3,113
FY16E
18,369
8,238
9,132
999
(3,584)
14,785
(6,901)
(3,449)
4,435
(384)
4,051
(240)
3,811
(806)
3,006
(111)
2,895
(15)
2,879
FY17E
21,437
7,043
12,315
2,079
(3,402)
18,035
(7,691)
(5,236)
5,109
(466)
4,643
(948)
3,695
(1,771)
1,924
(483)
1,441
(8)
1,433
3,800
3,800
3,800
3,800
1.50
1.34
89%
1.51
6,593
0.82
0.25
30%
0.85
4,172
0.76
0.23
30%
0.80
3,966
0.38
0.19
50%
0.60
4,558
FY14A
5,707
638
(1,520)
374
5,199
FY15A FY16E FY17E

3,113 2,879 1,433
638
638 1,573
(1,149)
103
841
609
111
483
3,210 3,731 4,330
(2,754)
(388)
(2,366)
5
(2,748)
(4,585) (9,455) (5,126)

(388) (388) (679)
(4,197) (9,067) (4,447)
4
4
0
(4,581) (9,451) (5,126)
0
(5,928)
(175)
(6,103)
7,439
(4,625)
(254)
2,560
4,952
(806)
(475)
3,671
3,000
(627)
(694)
1,679
2,445 (1,376) (5,724) (797)

(55.3%) (156.3%) 316.1% (86.1%)
4,569
2,431 3,023 3,820
(33.5%) (46.8%) 24.3% 26.4%
Balance Sheet
Receivable
Inventories
Current assets
Net fixed assets
Total assets
a.
Payables
Short-term debt
Others
Current liabilities
Long-term debt
Total liabilities
a.
3,800 Gross debt
Net Debt/(cash)
0.65 a.
0.33 BVPS (HK$)
50%
0.65
6,040
Ratio Analysis
FY18E HK$ in millions, year end Dec
2,489 Gross revenue growth
2,571 Adj. EBITDA growth
138 EBITDA growth
769 EBIT growth
5,966 EPS growth
FY18E
26,061
7,255
15,616
3,190
(3,675)
22,386
(9,086)
(6,621)
6,679
(554)
6,125
(85)
6,040
(2,769)
3,270
(769)
2,502
(13)
2,489
(620)
(620)
0
0
(620)
(3,000)
(937)
(769)
(4,706)

Adj. EBITDA margin
EBITDA margin
EBIT margin
Net margin
P/E (x)
Core P/E (x)
Core EV/EBITDA (x)
Dividend yield
FCF yield
(771.1%) Price/BV (x)
4,577
19.8% Net debt to equity (x)
ROE
FY14A FY15A FY16E FY17E

4,232 5,421 3,372 4,255
428
243
233
172
110
108
90
105
138
170
142
165
4,908 5,941 3,837 4,698
9,534 13,828 22,645 26,198
2,065 1,869 1,701 1,503
320
317
676 1,170
16,828 21,955 28,859 33,569
FY18E
4,895
209
128
201
5,433
24,247
1,305
1,423
32,408
5,579 4,586 4,634 5,408 5,575

0
0
0
0
0
278
264
264
308
375
5,857 4,850 4,898 5,717 5,950
4,118 11,732 16,684 19,684 16,684
511
457
288
373
427
10,486 17,040 21,871 25,773 23,061
6,342 4,915 6,989 7,795 9,347
6,342 4,915 6,989 7,795 9,347
4,118 11,732 16,684 19,684 16,684
(114) 6,311 13,312 15,429 11,789
1.67
1.29
1.84
2.05
2.46
FY14A
(4.6%)
4.7%
4.1%
4.1%
7.0%
FY15A
(35.6%)
(36.1%)
(37.8%)
(43.1%)
(45.5%)
FY16E
(16.4%)
(4.8%)
(6.7%)
(8.4%)
(7.5%)
FY17E
16.7%
14.6%
(3.0%)
(36.0%)
(50.2%)
FY18E
21.6%
31.9%
63.5%
70.0%
73.6%
19.5%
19.3%
16.9%
16.9%
19.4%
19.0%
14.9%
14.6%
22.1% 21.7% 23.5%

21.6% 21.3% 23.2%
16.4% 9.0% 12.5%
16.5% 10.7% 9.5%
9.8
18.0
19.4
39.0 22.5
9.7
17.4
18.4
24.4 22.5
8.5
14.9
17.5
15.7 11.2
9.1% 1.7% 1.5% 1.3% 2.2%
4.4% (2.5%) (10.2%) (1.4%) 9.6%
8.2% 4.3% 5.4% 6.8% 8.2%
8.8
11.4
8.0
7.2
6.0
NM
1.3
1.9
2.0
1.3
263.8
31.9
36.6
9.6
8.0
89.6% 57.1% 51.0% 31.1% 29.0%
131.8% 44.4% 23.6% 16.7% 26.7%
37
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Sands China
Sands China (Overweight; Price Target: HK$39.00)
Investment Thesis
We are OW on Sands China with a Dec-17 PT of HK$39.0.
Despite the stocks run-up and seemingly full valuation on consensus, the case for
Sands China remains largely intact, in our view: i.e., best-in-class business mix with
dominant mass position and powerful clustering effects; a handsome cash return
(current yield of ~6% could have upside if Parisian continues to ramp well); and very
sizable upside risks to consensus (our FY17-18E EBITDA are >15% above
consensus).
Moreover, considering the potential looming upgrade in consensus, the stock may
not be that expensive after all note, on our estimates, Sands trades at 15x
EV/EBITDA on 2017E or 14x on 2018E.
Valuation
Our Dec-17 PT of HK$39.0 is derived via DCF, assuming 7.2% WACC, 3%

terminal growth and 50% discount to terminal value. This implies 15x EV/EBITDA
on 2018E, higher than multiples we assumed for peers given its better mix and
arguably higher earnings visibility.
Downside risks include: 1) RMB devaluation could dampen gaming demand from
China & could further tighten liquidity within the junket system; 2) Unfavorable
regulatory changes (e.g., China capital outflow control, junket industry regulation,
full smoking ban, potential costs associated with concession renewal, etc.); and
3) Stronger-than-expected competitive pressure from new Cotai casinos.
Company Data
52-week Range (HK$)
Market Cap ($ mn)
Market Cap ($ mn)
Shares O/S (mn)
Price (HK$)
Date Of Price
36.75-20.75
35,936
35,936
8,070
34.55
14 Nov 16
18.25
613.94
31-Dec-17
Sands China Ltd (Reuters: 1928.HK, Bloomberg: 1928 HK)

$ in mn, year-end Dec
FY14A
FY15A
FY16E
Revenue ($ mn)
9,505
6,820
6,671
Adjusted EBITDA ($ mn)
3,261
2,223
2,286
EBITDA ($ mn)
3,148
2,054
2,036
Net Profit ($ mn)
2,548
1,459
1,399
DPS ($)
0.26
0.26
0.26
Core EPS ($)
0.32
0.19
0.19
Dividend Yield
5.8%
5.8%
5.7%
Core P/E (x)
13.8
23.6
24.0
Core EV/EBITDA (x)
11.5
17.9
18.4
38
FY17E
7,645
2,730
2,572
1,753
0.26
0.22
5.7%
20.5
15.2
FY18E
8,065
3,008
2,832
1,998
0.26
0.25
5.7%
18.0
13.6
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512

improve investment sentiment and drive up share
price for the sector
Larger-than-expected table allocation from government upon

the new property opening (We modeled 250 additional tables)
Earlier-than-expected opening of Parisian (JPMe 1Q17)
strong momentum

system.
ban, etc.)
new Cotai casinos
Delay in opening of Parisian
Key financial metrics (US$m)

Reported revenue (net)
Revenue growth (%)
EBITDA (reported)
EBITDA margin (%)
Net profit
EPS (US$)
EPS growth (%)
DPS (US$)
Operating cash flow
Capex
Free cash flow
Net debt/equity (%)
ROE (%)
Key model assumptions (US$m)
Gross revenues
YoY (%)
VIP
YoY (%)
Mass & slots
YoY (%)
YoY (%)
Adjusted EBITDA
YoY (%)
Industry assumptions (US$b)
YoY (%)
VIP GGR
YoY (%)
Mass & slots GGR
YoY (%)
FY15A
6,820
-28%
2,054
30.1%
1,459
0.19
-41%
0.26
1,968
-1,251
716
36%
25%
FY15A
8,125
-30%
2,315
-48%
4,355
-22%
1,454
-9%
2,223
-32%
27.4%
FY15A
28.8
-34%
14.4
-45%
14.4
-19%
FY16E
6,671
-2%
2,036
30.5%
1,399
0.19
-2%
0.26
2,202
-1,435
767
67%
27%
FY16E
7,844
-3%
1,887
-19%
4,487
3%
1,470
1%
2,286
3%
29.1%
FY16E
27.7
-4%
12.5
-13%
15.3
6%
FY17E
7,645
15%
2,572
33.6%
1,753
0.22
17%
0.26
2,845
-575
2,270
68%
35%
FY17E
8,879
13%
1,923
2%
5,214
16%
1,742
19%
2,730
19%
30.8%
FY17E
30.1
9%
13.0
4%
17.1
12%
FY18E
8,065
5%
2,832
35.1%
1,998
0.25
14%
0.26
2,825
-215
2,610
59%
41%
FY18E
9,303
5%
1,932
0%
5,564
7%
1,806
4%
3,008
10%
32.3%
FY18E
32.1
6%
13.3
2%
18.8
10%

Our Dec-17 PT of HK$39.0 is derived via DCF, assuming 7.2%
WACC, 3% terminal growth and 50% discount to terminal value. This
implies 15x EV/EBITDA on 2018E, higher than multiples we assumed
for peers given its better mix and arguably higher earnings visibility.
HK$
FCFs in '17-22E
108,571
13.5
34%
Terminal value
231,810
28.7
74%
Less: '17E net debt
-25,626
-3.2
-8%
Fair value
314,755
39.0
100%
17.0 x
2018E
15.3 x
JPMe vs. consensus

EBITDA (US$ m)
JPMe
Consensus
Difference %
FY17E
2,730
2,359
16%
FY18E
3,008
2,516
20%
Dividend yield (%)

FY17E
FY18E
5.8%
5.8%
1.5%
1.6%
5.2%
5.2%
1.3%
2.2%
3.9%
3.9%
3.8%
3.8%
3.0%
2.8%
YTD
Stock perf.
29%
33%
28%
52%
-1%
1%
-10%
Comparative metrics
Sands China
Wynn Macau
MGM China
SJM Holdings
Melco International
Price
LC
34.6
32.8
11.6
14.7
5.4
17.0
Mkt Cap
US$ Mn
35.9
18.1
7.8
7.2
4.0
8.4
P/E (x)
FY17E
FY18E
20.5
18.0
20.2
18.4
30.8
18.7
24.4
22.5
12.9
19.5
20.1
19.9
NA
NA
EV/EBITDA (x)
FY17E
FY18E
15.3
13.7
11.5
10.8
14.5
11.8
15.7
11.2
10.8
9.4
10.5
9.6
NA
NA
39
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Table 17: Sands China: Summary of our forecasts

(US$m)
Gross revenues
YoY (%)
Venetian
YoY (%)
Sands Cotai Central
YoY (%)
Four Seasons
YoY (%)
Sands Macao
YoY (%)
Parisian
YoY (%)
Others (construction material, etc)
Adjusted EBITDA
YoY (%)
Venetian
YoY (%)
Sands Cotai Central
YoY (%)
Four Seasons
YoY (%)
Sands Macao
YoY (%)
Parisian
YoY (%)
Venetian
Sands Cotai Central
Four Seasons
Sands Macao
Parisian
2013
11,118
35%
4,583
26%
3,462
151%
1,456
-5%
1,512
-4%
2014
11,629
5%
4,731
3%
3,869
12%
1,487
2%
1,431
-5%
2015
8,125
-30%
3,473
-27%
2,583
-33%
904
-39%
1,044
-27%
2016E
7,844
-3%
3,375
-3%
2,338
-9%
714
-21%
818
-22%
472
2017E
8,879
13%
3,273
-3%
2,199
-6%
666
-7%
768
-6%
1,826
106
2,900
47%
1,501
31%
738
247%
305
6%
362
3%
111
3,261
12%
1,548
3%
999
35%
375
23%
337
-7%
121
2,223
-32%
1,081
-30%
651
-35%
243
-35%
225
-33%
127
2,286
3%
1,117
3%
650
0%
207
-15%
178
-21%
100
146
2,730
19%
1,141
2%
643
-1%
214
3%
201
13%
492
26.1%
32.7%
21.3%
20.9%
23.9%
28.0%
32.7%
25.8%
25.2%
23.5%
27.4%
31.1%
25.2%
26.9%
21.6%
29.1%
33.1%
27.8%
29.0%
21.8%
30.8%
34.8%
29.2%
32.1%
26.2%
26.9%
2018E
9,303
5%
3,367
3%
2,284
4%
679
2%
780
2%
2,027
11%
165
3,008
10%
1,195
5%
691
7%
227
6%
213
6%
640
30%
32.3%
35.5%
30.2%
33.4%
27.2%
31.5%
2019E
9,691
4%
3,460
3%
2,389
5%
691
2%
793
2%
2,180
8%
178
3,238
8%
1,260
5%
748
8%
234
3%
221
4%
728
14%
33.4%
36.4%
31.3%
33.9%
27.9%
33.4%
Figure 59: Sands China: Revenue split by segment

100%
12%
14%
18%
Figure 60: Sands China: EBITDA split by segment

100%
19%
20%
19%
19%
80%
60%
80%
42%
48%
54%
57%
59%
60%
40%
45%
38%
28%
24%
22%
21%
2014
VIP
2015
Mass & slot
40
2016E
2017E
Non-gaming
2018E
62%
64%
16%
2013
29%
28%
27%
27%
27%
64%
66%
67%
68%
68%
13%
7%
2014
2015
6%
2016E
5%
2017E
5%
2018E
5%
2019E
20%
20%
0%
2013
23%
60%
60%
40%
20%
22%
2019E
0%
VIP
Mass & slot
Non-gaming
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Figure 61: Sands China: EBITDA vs. capex & dividends

(US$m)
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2013
Figure 62: Sands China: Net debt & Net debt/EBITDA

(USDm)
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2014
2015
Sands : EBITDA
2016E
Capex
1.5x
1.0x
0.5x
0.0x
2013
2017E 2018E 2019E

Shareholder return
2.0x
2014
2015
2016E
Sands net debt (LHS)
2017E
2018E
2019E
Sands net debt/EBITDA (RHS)
Table 18: Sands China: DCF analysis (7.2% WACC, 3% terminal growth)
(US$m)
Gross revenues
YoY (%)
EBITDA
YoY (%)
Margin (%)
(Capex)
PV of FCF
(HK$ mn)
Enterprise value
Less: net debt
Equity value
2018E
2017E
8,879
13%
2,572
26%
29.0%
304
-575
6.5%
-114
2,187
2,187
Value
572,191
-231,810
-25,626
314,755
8,070
39.0
17.0
15.3

2018E
6.3%
6.3%

Upside %
2018E
2019E
2020E
9,303
9,691
10,041
5%
4%
4%
2,832
3,041
3,213
10%
7%
6%
30.4%
31.4%
32.0%
37
60
-46
-215
-215
-215
2.3%
2.2%
2.1%
-124
-124
-121
2,530
2,762
2,831
2,360
2,404
2,299
Comments
End-2017E
2021E
10,493
4%
3,410
6%
32.5%
-5
-215
2.0%
-125
3,066
2,322
2022E
10,965
4%
3,608
6%
32.9%
180
-215
2.0%
-129
3,444
2,434
Terminal
Value
84,635
59,806
34.6
13%
41
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Sands China: Summary of Financials

$ in millions, year end Dec
Gross revenues
VIP gaming
Non-gaming
(Marketing and promotional expense)
Reported revenue
Adjusted EBITDA
EBITDA
(D&A)
EBIT
Pretax income
(Income tax)
Net Income
FY14A
11,629
4,419
5,605
1,605
(2,124)
9,505
(3,950)
(2,294)
3,261
(113)
3,148
(523)
2,624
(50)
(18)
2,556
(8)
2,548
FY15A
8,125
2,315
4,355
1,454
(1,305)
6,820
(2,642)
(1,955)
2,223
(169)
2,054
(535)
1,519
(48)
0
1,471
(11)
1,459
FY16E
7,844
1,887
4,487
1,470
(1,172)
6,671
(2,524)
(1,861)
2,286
(250)
2,036
(581)
1,454
(36)
0
1,419
(20)
1,399
FY17E
8,879
1,923
5,214
1,742
(1,234)
7,645
(2,827)
(2,088)
2,730
(159)
2,572
(725)
1,846
(69)
0
1,778
(25)
1,753
FY18E
9,303
1,932
5,564
1,806
(1,238)
8,065
(2,969)
(2,087)
3,008
(176)
2,832
(725)
2,107
(80)
0
2,027
(29)
1,998

.
EPS ($)
DPS ($)
Payout ratio
8,065
8,069
8,070
8,070
8,070
Core EPS (ex-one offs) ($)

Cashflow Statement
Net profit
Others
.
Capex
Maintenance
Expansionary
Others
a.
Dividends paid
Others
0.32
3,178
0
179
850
50 (250)
(2,601) (2,071) (2,066) (2,066) (2,066)
(112)
(76)
(54)
(63)
(65)
(2,713) (1,968) (1,270) (2,078) (2,381)
FCF to the firm

YoY change
YoY change
2,293
716
767 2,270
(7.4%) (68.8%) 7.1% 195.8%
2,905 1,748 2,033 2,537
3.7% (39.8%) 16.3% 24.8%
0.32
0.26
81%
0.18 0.17
0.26 0.26
142% 148%
0.22 0.25
0.26 0.26
118% 103%
0.19
2,118
0.22
2,572
(931) (1,251) (1,435)

(283) (188) (190)
(647) (1,063) (1,245)
13
(1)
8
(917) (1,252) (1,427)
(575)
(225)
(350)
0
(575)

2,542 1,291
788
980 1,209
639
498
431
407
427
14
12
11
13
14
0
0
0
0
0
3,195 1,801 1,231 1,400 1,649
6,913 7,588 8,488 8,383 7,919
21
28
28
28
28
1,219 1,355 1,355 1,355 1,355
11,348 10,772 11,101 11,166 10,951
1,608
6
6
1,620
3,194
104
4,918
6,429
6,429
1,429
6
5
1,441
3,379
113
4,933
5,839
5,839
1,530
6
5
1,541
4,229
159
5,929
5,172
5,172
1,812
6
6
1,824
4,279
205
6,308
4,858
4,858
1,868
6
6
1,881
4,029
250
6,160
4,791
4,791
3,200
658
3,385 4,235 4,285 4,035

2,094 3,447 3,306 2,827
0.80
0.72
0.64
0.60
0.59
FY14A
4.6%
12.4%
12.4%
14.6%
14.9%
FY15A
(30.1%)
(31.8%)
(33.4%)
(42.1%)
(42.7%)
FY16E
(3.5%)
2.8%
0.8%
(4.2%)
(4.2%)
FY17E
13.2%
19.5%
20.5%
27.0%
25.3%
FY18E
4.8%
10.2%
10.1%
14.1%
14.0%
28.0%
27.3%
22.6%
22.3%
27.4%
26.1%
18.7%
18.8%
29.1%
27.2%
18.5%
19.1%
30.8%
29.0%
20.8%
19.7%
32.3%
30.4%
22.6%
21.5%
14.1
13.8
11.5
5.8%
6.4%
8.1%
5.6
24.6
23.6
17.9
5.8%
2.0%
4.9%
6.2
25.7
24.0
18.4
5.7%
2.1%
5.7%
6.9
20.5
20.5
15.2
5.7%
6.3%
7.1%
7.4
18.0
18.0
13.6
5.7%
7.3%
7.0%
7.5
0.25
2,832
Ratio Analysis
FY14A FY15A FY16E FY17E FY18E $ in millions, year end Dec
2,548 1,459 1,399 1,753 1,998 Gross revenue growth
523
535
581
725
725 Adj. EBITDA growth
23 (148)
168
304
37 EBITDA growth
130
121
54
63
65 EBIT growth
3,224 1,968 2,202 2,845 2,825 EPS growth
42
0.19
2,134
Balance Sheet
Receivable
Inventories
Current assets
Net fixed assets
Total assets
a.
Payables
Short-term debt
Others
Current liabilities
Long-term debt
Total liabilities
a.
Gross debt
Net Debt/(cash)
a.
BVPS ($)
(215)
(215)
0
0
(215)

Adj. EBITDA margin
EBITDA margin
EBIT margin
Net margin
P/E (x)
Core P/E (x)
Core EV/EBITDA (x)
Dividend yield
FCF yield
15.0% Price/BV (x)
2,530
(0.3%) Net debt to equity (x)
0.1
65.2
45.0%
0.4
0.7
0.7
0.6
46.2 63.9 39.8 37.5
27.0% 24.2% 30.0% 34.9%
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Melco International
Melco International (Neutral; Price Target: HK$11.50)
Investment Thesis
We remain Neutral on Melco Intl (Melco) with a Dec-17 PT of HK$11.5.
Melco shares fell 10% YTD (vs the sector up 19% on average) and have been the
worst performer in Macau gaming. We do feel the correction is overdone (hence, we
see upside here). But, we are fundamentally less enthusiastic about this stock (vs. our
OW-rated names), as we are wary that MPELs properties could face tougher
competition from openings such as City of Dream vs. Wynn Palace & MGM Cotai
(opening 2Q17E), and Studio City vs. Parisian.
Valuation
Our Dec-17 PT of HK$11.5 is derived via SOTP, with a PT of US$17.0 for Melco
Crown (covered by our US Gaming Analyst Joseph Greff), the market price for other
holdings, and net cash. We apply a holding discount of 33%.
Downside risks include: 1) RMB devaluation could dampen gaming demand from
China & could further tighten liquidity within junket system; 2) unfavorable
regulatory changes; and 3) slower-than-expected ramp-up of Studio City.
Upside risks include: 1) Potential policy support (such as policy loosening, allowing
smoking lounges inside casinos, etc.); 2) stronger-than-expected improvement in
industry demand; 3) faster-than-expected ramp-up in Studio City.
Company Data
52-week Range (HK$)
Market Cap (HK$ mn)
Market Cap ($ mn)
Shares O/S (mn)
Price (HK$)
Date Of Price
Exchange Rate
HSI
Price Target (HK$)
11.99-6.87
16,147
2,081
1,547
10.44
14 Nov 16
3.38
34.04
7.76
22,222.22
31-Dec-17
11.50
Melco International Development (Reuters: 0200.HK, Bloomberg: 200 HK)

FY14A
FY15A
FY16E
FY17E
Revenue (HK$ mn)
202
427
479
517
EBITDA (HK$ mn)
1,424
180
626
978
Net Profit (HK$ mn)
1,487
101
588
972
EPS (HK$)
0.96
0.07
0.38
0.63
DPS (HK$)
0.19
0.04
0.19
0.31
Dividend Yield
1.8%
0.3%
1.8%
3.0%
P/E (x)
10.9
159.5
27.5
16.6
EV/EBITDA (x)
11.0
86.8
23.9
14.8
FY18E
543
922
908
0.59
0.29
2.8%
17.8
15.4
43
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512

Faster-than-expected ramp-up of Studio City

strong momentum
RMB devaluation could dampen gaming demand from China

& could further tighten liquidity within junket system.
Unfavorable regulatory changes (e.g. China capital outflow
control, junket industry regulation, full smoking ban, etc.)
Slower-than-expected ramp-up of Studio City.
Stronger-than-expected competitive pressure from new Cotai
casinos

Revenues
Revenue growth (%)
Operating profits
Net profit
EPS (HK$)
EPS growth (%)
DPS (HK$)
Net debt/equity (%)
ROE (%)
FY15A
427
112%
141
101
0.07
-93%
0.04
-7%
1%
FY16E
479
12%
586
588
0.38
481%
0.19
-11%
5%
FY17E
517
8%
936
972
0.63
65%
0.31
-14%
7%
FY18E
543
5%
877
908
0.59
-7%
0.29
-15%
7%
Industry assumptions (US$ mn)

YoY (%)
VIP GGR
YoY (%)
Mass & slots GGR
YoY (%)
FY15A
28.8
-34%
14.4
-45%
14.4
-19%
FY16E
27.7
-4%
12.5
-13%
15.3
6%
FY17E
30.1
9%
13.0
4%
17.1
12%
FY18E
32.1
6%
13.3
2%
18.8
10%

Our Dec-17 PT of HK$11.5 is derived via SOTP, with a PT of US$17.0 for
Melco Crown, the market price for other holdings, and net cash. We apply a
holding discount of 33%.
Breakdown of our SOTP-based price target
Other
investments,
2%
Net cash, 7%
MPEL stake,
91%
EPS
JPMe
Consensus
Difference %
FY17E
0.63
0.63
0%
FY18E
0.59
0.62
-5%
Dividend yield (%)

FY17E
FY18E
5.8%
5.8%
1.5%
1.6%
5.2%
5.2%
1.3%
2.2%
3.9%
3.9%
3.8%
3.8%
3.0%
2.8%
YTD
Stock perf.
29%
33%
28%
52%
-1%
1%
-10%
Comparative metrics
Price
LC
34.6
32.8
11.6
14.7
5.4
17.0
Mkt Cap
US$ Mn
35.9
18.1
7.8
7.2
4.0
8.4
P/E (x)
FY17E
FY18E
20.5
18.0
20.2
18.4
30.8
18.7
24.4
22.5
12.9
19.5
20.1
19.9
Sands China
Wynn Macau
MGM China
SJM Holdings
Melco International
44
EV/EBITDA (x)
FY17E
15.3
11.5
14.5
15.7
10.8
10.5
NA
FY18E
13.7
10.8
11.8
11.2
9.4
9.6
NA
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com

15 November 2016
Sean Zhuang
(852) 2800-8512
Table 19: Melco: NAV analysis (33% discount)

(HK$ mn)
% Stake held
Investments:
Melco Crown (MPEL US)
37.9%
MelcoLot (8198 HK)
40.7%
Ent. Gaming Asia (EGT US)
64.8%
Total investments
Net cash / (debt)
Net asset value
Holding company discount (%)
Fair value after discount
Value As % of NAV
24,130
467
91
24,688
1,873
26,561
33%
17,783
11.50

Upside %
90.8%
1.8%
0.3%
92.9%
7.1%
100%
Comments
JPM target price
Market price
Market price
End-2017E
After the holding co discount of 33%
10.4
10%
Figure 63: Melco: Historical NAV discount (12-month fwd rolling)

(HK$)
35
0%
-60%
-70%
200 HK share price(LHS)
2016
-50%
2015
-40%
10
2014
-30%
15
2013
-20%
20
2012
-10%
25
2011
30
NAV discount (RHS)
45
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com

15 November 2016
Sean Zhuang
(852) 2800-8512
Melco International: Summary of Financials

Reported revenue
EBIT
Pretax income
(Income tax)
Profit after tax
(Minority Interest)
Net Income
.
EPS (HK$)
DPS (HK$)
Payout ratio
Balance Sheet
FY14A FY15A FY16E FY17E FY18E HK$ in millions, year end Dec
202
427
479
517
543 Cash and cash equivalents
1,415
141
586
936
877 Short term investments
(44)
(46)
(46)
(46)
(46) Receivable
64
(3)
(3)
(3)
(3) Inventories
1,435
92
537
887
828 Other current assets
0
(1)
(7)
(12)
(11) Current assets
1,435
91
530
875
817 Net fixed assets
52
10
59
97
90 Intangibles and goodwill
1,487
101
588
972
908 Other non-current assets
Total assets
1,548 1,542 1,547 1,547 1,547 a.
Payables
0.96
0.07
0.38
0.63
0.59 Short-term debt
0.19
0.04
0.19
0.31
0.29 Others
20%
53%
50%
50%
50% Current liabilities
Long-term debt
Total liabilities
FY14A
550
1,559
88
22
8
2,227
124
6
11,741
14,097
FY15A
467
1,730
96
20
0
2,314
83
6
11,914
14,317
FY16E FY17E FY18E

1,202 1,734 2,110
1,643 1,479 1,331
108
116
122
23
24
26
0
0
0
2,976 3,355 3,590
72
60
45
6
6
6
11,621 11,751 11,886
14,675 15,171 15,526
141
395
35
571
794
12
1,378
388
12,332
121
5
66
192
1,335
11
1,538
393
12,386
136
147
154
5
5
5
66
66
66
207
217
225
1,335 1,335 1,335
11
11
11
1,553 1,564 1,571
334
237
147
12,796 13,378 13,816
13,130 13,615 13,963
.
.
12,720
12,778
a.
Gross debt
1,189
1,340
.
.
Net Debt/(cash)
(919)
(857) (1,505) (1,873) (2,101)
a.
BVPS (HK$)
.
Cashflow Statement
Ratio Analysis
FY14A FY15A FY16E FY17E FY18E HK$ in millions, year end Dec
Net profit
1,435
91
530
875
817 EBIT growth
9
39
41
43
45 EPS growth
30
21
87
165
148
Others
(1,529) (129) (750) (1,108) (1,058) P/E (x)
(55)
22
(93)
(25)
(47) Dividend yield
.
Price/BV (x)
Capex
(8)
(20)
(30)
(30)
(30)
Maintenance
(8)
(20)
(30)
(30)
(30) Net debt to equity (x)
Expansionary
- Interest coverage (x)
Others
671
(51) 1,036
977
923 ROE
663
(70) 1,006
947
893
.
(28)
151
0
0
0
Dividends paid
(515) (140) (178) (390) (470)
Others
279
(45)
0
0
0
(264)
(34) (178) (390) (470)
46
7.97
8.01
1,340
8.27
1,340
8.65
1,340
8.93

(17.4%) (90.0%) 314.8% 59.8% (6.3%)
(7.7%) (93.2%) 481.0% 65.2% (6.6%)
10.9
1.8%
1.3
159.5
0.3%
1.3
27.5
1.8%
1.3
16.6
3.0%
1.2
17.8
2.8%
1.2
NM
32.4
12.4%
NM
3.9
0.8%
NM
13.7
4.7%
NM
21.4
7.4%
NM
20.1
6.7%
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
SJM Holdings
SJM Holdings (Neutral; Price Target: HK$5.80)
Investment Thesis
We rate SJM Holding as Neutral, as we think this stock can benefit from broader
sentiment improvements into the expected upcycle in demand & profits.
Our model suggests SJMs EBITDA may not fall any further in 2017, vs. a large
65% decline in EBITDA for two years till 2Q16; this might just be a good enough
reason for the stock to rebound higher, as SJM has fallen 1% year to date, having
underperformed Macau peers by 20%.
That said, we are not turning outright bullish on this name (hence, Neutral), given the
risks associated with its Cotai project, i.e., regardless of stabilizing EBITDA, its
balance sheet will have to fast-deteriorate from massive Cotai capex (in fact, its
about the same size as its current market cap) which, in turn, would weigh on its
multiples. Meanwhile, we think SJM has greater Cotai execution risk vs. peers, as it
is the only company that has no expertise in resort-type casinos. Its valuation (11x
17E EBITDA) is below industry average (13x), but not cheap enough, in our view.
Valuation
Our end-17 PT of HK$5.8 is derived from our DCF valuation, assuming an 8.1%
WACC, 3% terminal growth, and a 50% discount to terminal value. Our PT implies
11x EV/EBITDA on 2017E or 10x on 2018E.
Upside risks include: 1) slower-than-expected market share loss; 2) larger-thanexpected table allocation (we modeled 150); 3) earlier-than-expected opening of
Grand Lisboa Cotai (JPMe 1Q18); and 4) stronger-than-expected recovery in
industry demand. Downside risks include: 1) RMB devaluation could dampen
gaming demand from China & could further tighten liquidity within the junket
system; 2) unfavorable regulatory changes; 3) stronger-than-expected competitive
pressure from new Cotai casinos
Company Data
52-week Range (HK$)
Market Cap (HK$ mn)
Market Cap ($ mn)
Shares O/S (mn)
Price (HK$)
Date Of Price
6.27-4.40
30,771
3,966
5,657
5.44
14 Nov 16
11.98
65.40
31-Dec-17
SJM Holdings Limited (Reuters: 0880.HK, Bloomberg: 880 HK)

FY14A
FY15A
FY16E
Revenue (HK$ mn)
79,934
49,171
41,678
7,763
3,862
3,300
EBITDA (HK$ mn)
7,545
3,550
2,900
Net Profit (HK$ mn)
6,731
2,465
2,028
DPS (HK$)
0.84
0.25
0.22
Core EPS (HK$)
1.24
0.49
0.43
Dividend Yield
15.4%
4.6%
4.0%
Core P/E (x)
4.4
11.1
12.7
Core EV/EBITDA (x)
0.9
3.7
6.3
FY17E
41,124
3,333
2,933
1,985
0.21
0.42
3.9%
12.9
10.8
FY18E
48,300
3,907
3,157
832
0.21
0.28
3.9%
19.5
9.4
47
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Sequentially stabilizing gaming demand

improve investment sentiment and drive up share
price for the sector
Larger-than-expected table allocation from government upon

the new property opening (We modeled 200 additional tables)
Earlier-than-expected opening of Grand Lisboa Palace (JPMe
1Q18)
strong momentum
Stronger-than-expected improvement in industry demand
Delay in Cotai opening

China & could further tighten liquidity within the junket
system
Unfavorable regulatory changes (e.g., China capital
control, junket regulation, full smoking ban, potential costs
associated with concession renewal, etc.)
Stronger-than-expected competitive pressure from new
Cotai casinos

Revenues
Revenue growth (%)
EBITDA (reported)
EBITDA margin (%)
Net profit
EPS (HK$; ex-one-off)
EPS growth (%)
DPS (HK$)
Operating cash flow
Capex
Free cash flow
Net debt/equity (%)
ROE (%)
Gross revenues
YoY (%)
VIP
YoY (%)
Mass & slots
YoY (%)
YoY (%)
Adjusted EBITDA
YoY (%)
YoY (%)
VIP GGR
YoY (%)
Mass & slots GGR
YoY (%)
FY15A
49,171
-38%
3,550
7.2%
2,465
0.49
-60%
0.25
409
-3,352
-2,944
-69%
12%
FY15A
49,171
-38%
25,064
-48%
23,526
-24%
581
-13%
3,862
-50%
7.9%
FY15A
28.8
-34%
14.4
-45%
14.4
-19%
FY16E
41,678
-15%
2,900
7.0%
2,028
0.43
-13%
0.22
2,468
-8,000
-5,532
-39%
10%
FY16E
41,678
-15%
19,117
-24%
22,047
-6%
514
-12%
3,300
-15%
7.9%
FY16E
27.7
-4%
12.5
-13%
15.3
6%
FY17E
41,124
-1%
2,933
7.1%
1,985
0.42
-2%
0.21
3,059
-16,500
-13,441
21%
10%
FY17E
41,124
-1%
18,574
-3%
21,959
0%
591
15%
3,333
1%
8.1%
FY17E
30.1
9%
13.0
4%
17.1
12%
FY18E
48,300
17%
3,157
6.5%
832
0.28
-34%
0.21
3,015
-2,250
765
24%
6%
FY18E
48,300
17%
19,875
7%
26,154
19%
2,272
284%
3,907
17%
8.1%
FY18E
32.1
6%
13.3
2%
18.8
10%

Our Dec-17 PT of HK$5.8 is derived from our DCF valuation, assuming
an 8.1% WACC, 3% terminal growth, and a 50% discount to terminal
value. Our PT implies 11x EV/EBITDA on 2017E or 10x on 2018E; this is
lower than what we assumed for peers, to compensate for its lack of
experience in the integrated resort casino business.
HK$
FCFs in '17-22E
891
0.2
3%
Terminal value
37,195
6.6
113%
'17E net cash
-5,284
-0.9
-16%
Fair value
32,803
5.8
100%
11.4 x
2018E
9.9 x
JPMe vs. consensus

EBITDA (HK$ m)
JPMe
Consensus
Difference %
FY17E
3,333
2,876
16%
FY18E
3,907
3,891
0%
Dividend yield (%)

FY17E
FY18E
5.8%
5.8%
1.5%
1.6%
5.2%
5.2%
1.3%
2.2%
3.9%
3.9%
3.8%
3.8%
3.0%
2.8%
YTD
Stock perf.
29%
33%
28%
52%
-1%
1%
-10%
Comparative metrics
Sands China
Wynn Macau
MGM China
SJM Holdings
Melco International
Price
LC
34.6
32.8
11.6
14.7
5.4
17.0
Mkt Cap
US$ Mn
35.9
18.1
7.8
7.2
4.0
8.4
48
P/E (x)
FY17E
FY17E
20.5
18.0
20.2
18.4
30.8
18.7
24.4
22.5
12.9
19.5
20.1
19.9
EV/EBITDA (x)
FY17E
15.3
11.5
14.5
15.7
10.8
10.5
NA
FY18E
13.7
10.8
11.8
11.2
9.4
9.6
NA
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Table 20: SJM: Summary of our forecasts

(HK$m)
Gross revenues
YoY (%)
Grand Lisboa
YoY (%)
Other self-run casinos
YoY (%)
3rd party satellite casinos
YoY (%)
Lisboa Palace
Others
Adjusted EBITDA
YoY (%)
Grand Lisboa
YoY (%)
YoY (%)
YoY (%)
Lisboa Palace
Grand Lisboa
Lisboa Palace
Gross revenues
YoY (%)
VIP
YoY (%)
Mass table
YoY (%)
Slot machine
YoY (%)
YoY (%)
2013
87,651
10%
32,958
10%
12,450
12%
42,259
10%
2014
79,933
-9%
30,242
-8%
9,933
-20%
39,749
-6%
2015
49,171
-38%
17,087
-43%
6,563
-34%
25,491
-36%
2016E
41,678
-15%
13,902
-19%
5,794
-12%
21,977
-14%
2017E
41,124
-1%
13,911
0%
6,047
4%
21,092
-4%
-15
8,676
14%
4,898
5%
1,598
34%
1,803
13%
9
7,763
-11%
4,483
-8%
1,461
-9%
1,683
-7%
30
3,862
-50%
2,252
-50%
749
-49%
722
-57%
5
3,300
-15%
1,765
-22%
648
-14%
727
1%
75
3,333
1%
1,799
2%
674
4%
700
-4%
9.9%
14.9%
12.8%
4.3%
9.7%
14.8%
14.7%
4.2%
7.9%
13.2%
11.4%
2.8%
7.9%
12.7%
11.2%
3.3%
8.1%
12.9%
11.1%
3.3%
87,651
10%
55,910
9%
29,652
13%
1,394
-7%
695
9%
79,933
-9%
48,244
-14%
29,686
0%
1,338
-4%
665
-4%
49,171
-38%
25,064
-48%
22,386
-25%
1,140
-15%
581
-13%
41,678
-15%
19,117
-24%
20,937
-6%
1,109
-3%
514
-12%
41,124
-1%
18,574
-3%
20,878
0%
1,081
-3%
591
15%
2018E
48,300
17%
12,471
-10%
6,057
0%
19,693
-7%
10,022
56
3,907
17%
1,850
3%
789
17%
656
-6%
452
8.1%
14.8%
13.0%
3.3%
4.5%
2019E
50,605
5%
12,456
0%
5,955
-2%
19,239
-2%
12,897
57
5,202
33%
1,931
4%
796
1%
648
-1%
1,668
10.3%
15.5%
13.4%
3.4%
12.9%
48,300
17%
19,875
7%
24,546
18%
1,607
49%
2,272
284%
50,605
5%
20,388
3%
25,607
4%
1,779
11%
2,830
25%
Figure 64: SJM: Revenue split by segment

100%
1%
1%
80%
35%
39%
1%
1%
48%
Figure 65: SJM: EBITDA split by segment

1%
53%
53%
60%
40%
64%
60%
20%
5%
6%
2014
VIP
7%
4%
60%
65%
6%
7%
7%
6%
13%
73%
76%
76%
78%
73%
21%
17%
17%
16%
14%
2015
2016E
2017E
2018E
2019E
80%
54%
54%
60%
40%
51%
46%
45%
41%
40%
0%
2013
100%
2015
2016E
Mass & slot
2017E
Non-gaming
2018E
2019E
20%
33%
31%
0%
2013
2014
VIP
Mass & slot
Non-gaming
49
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
Figure 66: SJM: EBITDA vs. capex & dividend
Figure 67: SJM: Net debt and Net debt/EBITDA

(USDm)
1,000
(US$m)
2,000
2.0x
1.0x
1,500
1,000
500
0.0x
-1,000
-1.0x
-2,000
-2.0x
-3.0x
-3,000
-4.0x
-4,000
0
2013
2014
2015
SJM : EBITDA
2016E
Capex
-5.0x
2013
2017E 2018E 2019E

Shareholder return
2014
2015
2016E
SJM net debt (LHS)
2017E
2018E
2019E
SJM net debt(cash)/EBITDA (RHS)
Table 21: SJM: DCF analysis (8.1% WACC, 3% terminal growth)

(HK$m)
Gross revenues
YoY (%)
EBITDA
YoY (%)
Margin (%)
(Capex)
PV of FCF
(HK$ mn)
Enterprise value
Less: non-controlling shares
Less: net debt
Equity value
Implied EV/EBITDA at PT (x)
Recurring FCF yield at PT (x)
2017E
2018E
2017E
41,124
-1%
3,333
1%
8.1%
33
-16,500
40.1%
-507
-13,642
-13,642
Value
75,282
-37,195
-132
-5,152
32,803
5,657
5.80
11.4
9.9
2017E
2018E
8.4%
7.8%

Upside %
50
5.4
7%
2018E
2019E
2020E
48,300
50,605
52,114
17%
5%
3%
3,907
5,202
5,870
17%
33%
13%
8.1%
10.3%
11.3%
-253
-169
52
-2,250
-1,000
-1,000
4.7%
2.0%
1.9%
-1,079
-343
-254
324
3,690
4,668
300
3,157
3,694
Comments
End-2017E
End-2017E
2021E
53,938
3%
6,292
7%
11.7%
10
-1,000
1.9%
-262
5,040
3,689
2022E
55,826
3%
6,735
7%
12.1%
-10
-1,000
1.8%
-270
5,456
3,694
Terminal
Value
109,882
74,390
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
SJM Holdings: Summary of Financials

Gross revenues
79,934 49,171 41,678 41,124
VIP gaming
48,244 25,064 19,117 18,574
31,024 23,526 22,047 21,959
Non-gaming
665
581
514
591
(Marketing and promotional expense) (33,789) (18,455) (14,776) (14,304)
(30,496) (18,820) (15,944) (15,699)
(7,887) (8,034) (7,658) (7,788)
Adjusted EBITDA
7,763
3,862 3,300 3,333
(218)
(312) (400) (400)
EBITDA
7,545
3,550 2,900 2,933
(D&A)
(1,100) (1,101) (1,101) (1,086)
EBIT
6,445
2,449 1,799 1,847
299
239
125
34
125
(197)
125
125
Pretax income
6,870
2,490 2,048 2,005
(Income tax)
(88)
(38)
(32)
(31)
Profit after tax
6,781
2,452 2,017 1,975
(Minority interest)
(51)
13
11
11
Net Income
6,731
2,465 2,028 1,985
FY18E
48,300
19,875
26,154
2,272
(15,230)
(17,828)
(11,335)
3,907
(750)
3,157
(2,401)
755
(40)
125
840
(13)
827
4
832

.
EPS (HK$)
DPS (HK$)
Payout ratio
5,611
5,657
5,657
5,657
5,657
1.20
0.84
70%
0.44
0.25
57%
0.36
0.22
60%
0.35
0.21
60%
0.15
0.21
143%

Cashflow Statement
Net profit
Others
.
Capex
Maintenance
Expansionary
Others
a.
Dividends paid
Others
1.24
7,763
0.49
3,862
0.43
3,300
0.42
3,333
0.28
3,907

6,781
2,452 2,017 1,975
1,100
1,101 1,101 1,086
(1,691) (3,541) (526)
33
62
396 (125)
(34)
6,252
409 2,468 3,059
FY18E
827
2,401
(253)
40
3,015
FCF to the firm

YoY change
YoY change
Balance Sheet
Short term investments
Receivable
Inventories
Current assets
Net fixed assets
Total assets
a.
Payables
Short-term debt
Others
Current liabilities
Long-term debt
Total liabilities
a.
Gross debt
Net Debt/(cash)
a.
BVPS (HK$)
Ratio Analysis
Gross revenue growth
Adj. EBITDA growth
EBITDA growth
EBIT growth
EPS growth
(3,650) (3,352) (8,000) (16,500) (2,250) Margins (based on gross revenue)

(1,000)
(502) (1,000) (500)
(750) Adj. EBITDA margin
(2,650) (2,850) (7,000) (16,000) (1,500) EBITDA margin
1,029
8,153 3,592 2,080
60 EBIT margin
(2,621)
4,801 (4,408) (14,420) (2,190) Net margin
(517)
(254) 1,000 15,000
(5,769) (4,073) (1,188) (1,473)
1,055
(58)
(73) (276)
(5,230) (4,385) (261) 13,251
2,603 (2,943)
(69.1%) (213.1%)
6,368
573
(32.9%) (91.0%)
FY14A
9,547
14,346
2,094
63
79
26,128
11,431
2,743
1,913
42,215
FY15A
10,372
6,523
1,658
63
61
18,677
14,054
2,642
1,481
36,855
FY16E
8,171
3,081
1,506
53
52
12,863
20,960
2,636
1,481
37,939
FY17E
10,061
1,500
1,486
53
51
13,150
36,376
2,635
1,257
53,418
FY18E
9,373
1,500
2,045
62
60
13,040
36,225
2,635
1,677
53,577
14,383
258
391
15,033
733
1,587
17,353
98
24,764
24,862
10,730
158
409
11,297
554
1,524
13,375
154
23,326
23,479
10,095
158
346
10,600
1,554
1,476
13,631
143
24,166
24,309
10,111
158
342
10,611
16,554
1,442
28,607
132
24,678
24,810
10,375
158
401
10,935
16,554
1,461
28,950
128
24,498
24,626
991
713 1,713 16,713 16,713
(22,901) (16,182) (9,539) 5,152 5,839
4.41
FY14A
(8.8%)
(10.5%)
(10.5%)
(13.3%)
(13.6%)
9.7%
9.7%
8.1%
8.7%
4.12
4.27
4.36
4.33
FY15A FY16E FY17E FY18E

(38.5%) (15.2%) (1.3%) 17.4%
(50.3%) (14.6%) 1.0% 17.2%
(50.3%) (14.6%) 1.0% 17.2%
(62.0%) (26.5%) 2.7% (59.1%)
(63.7%) (17.7%) (2.1%) (58.1%)
7.9%
7.9%
5.0%
5.6%
7.9%
7.9%
4.3%
5.8%
8.1%
8.1%
4.5%
5.8%
8.1%
8.1%
1.6%
3.3%
0
(1,011)
(501)
(1,513)
P/E (x)
4.5
12.5
15.2
15.5
37.0
Core P/E (x)
4.4
11.1
12.7
12.9
19.5
Core EV/EBITDA (x)
0.9
3.7
6.3
10.8
9.4
Dividend yield
15.4% 4.6% 4.0% 3.9% 3.9%
FCF yield
8.5% (9.6%) (18.0%) (43.7%) 2.5%
(5,532) (13,441)
765 Recurring eFCF yield
20.9% 1.9% 8.3% 9.0% 8.4%
87.9% 142.9% (105.7%) Price/BV (x)
1.2
1.3
1.3
1.2
1.3
2,545 2,758
2,574
344.0% 8.4% (6.7%) Net debt to equity (x)
NM
NM
NM
0.2
0.2
NM
NM
NM
NM
97.0
ROE
28.9% 11.6% 10.2% 9.8% 6.4%
Cash ROIC (EBITDA/invested capital) 641.0% 63.1% 23.9% 12.4% 10.0%
51
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
JPM Q-Profile
Wynn Macau Ltd. (MACAU / Consumer Discretionary)
As Of: 11-Nov-2016
Quant_Strategy@jpmorgan.com
Local Share Price
Current:
11.22
12 Mth Forward EPS
Current:
0.51
2.50
40.00
35.00
2.00
30.00
25.00
1.50
20.00
1.00
15.00
10.00
0.50
PE (1Yr Forward)
Current:
21.8x
30.0x
P/E Relative to Index
Oct/15
Jun/16
Feb/15
Oct/13
Jun/14
Feb/13
Oct/11
Jun/12
Feb/11
Oct/09
Jun/10
Feb/09
Oct/07
Jun/08
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Jun/04
Feb/03
0.00
Oct/01
Oct/16
Jan/16
Jul/14
Apr/15
Oct/13
Jan/13
Jul/11
Apr/12
Oct/10
Jan/10
Jul/08
Apr/09
Oct/07
Jan/07
Jul/05
Apr/06
Oct/04
Jan/04
Jul/02
Apr/03
Oct/01
0.00
Jun/02
5.00
Current:
1.00
0.90
25.0x
0.80
0.70
20.0x
0.60
15.0x
0.50
0.40
10.0x
0.30
0.20
5.0x
0.10
4.58%
ROE (Trailing)
81.05
60.00
Current:
Jun/16
Oct/15
Feb/15
Jun/14
Oct/13
Feb/13
Jun/12
Oct/11
Feb/11
Jun/10
Oct/09
Feb/09
Jun/08
Oct/07
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
0.00
Current:
P/B Trailing
Jun/16
Oct/15
Feb/15
Jun/14
Oct/13
Feb/13
Jun/12
Oct/11
Feb/11
Jun/10
Oct/09
Feb/09
Jun/08
Oct/07
Price/Book (Value)
30.0x
50.00
Feb/07
Jun/06
Oct/05
Feb/05
Jun/04
Oct/03
Oct/01
Oct/15
Current:
Jun/16
Feb/15
Jun/14
Oct/13
Feb/13
Oct/11
Jun/12
Feb/11
Oct/09
Jun/10
Feb/09
0.0
Jun/08
1.0
0%
Oct/07
2.0
1%
Feb/07
3.0
2%
Jun/06
4.0
3%
Oct/05
5.0
4%
Feb/05
6.0
5%
Oct/03
7.0
6%
Jun/04
8.0
7%
Feb/03
9.0
8%
Oct/01
Jun/04
Dividend Yield (Trailing)

10.0
Proxy
9%
Jun/02
Feb/03
Oct/01
Oct/15
Jun/16
Feb/15
Jun/14
Oct/13
Current:
US BY
Feb/03
12Mth fwd EY
Jun/02
10%
Feb/13
Oct/11
Jun/12
Feb/11
Oct/09
Jun/10
Feb/09
Jun/08
Oct/07
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
Jun/02
Earnings Yield (& Local Bond Yield)
Jun/02
0.00
0.0x
27.4x
P/B Forward
25.0x
40.00
20.0x
30.00
15.0x
20.00
10.0x
10.00
5.0x
Jun/16
Oct/15
Feb/15
Jun/14
Oct/13
Feb/13
Jun/12
Oct/11
Feb/11
Jun/10
Oct/09
Feb/09
Jun/08
Oct/07
Feb/07
Jun/06
Oct/05
Feb/05
Jun/04
Oct/03
Feb/03
Oct/01
0.0x
Jun/02
Oct/15
Jun/16
Feb/15
Jun/14
Oct/13
Jun/12
Feb/13
Oct/11
Feb/11
Oct/09
Jun/10
Feb/09
Jun/08
Oct/07
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
Jun/02
0.00
Summary
Wynn Macau Ltd.
MACAU
Consumer Discretionary
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
7702.78
28.7088 TICKER 1128 HK
Hotels Restaurants & Leisure
Latest
Min
Max
21.85x
10.10
27.43
27.43x
0.00
9.28
0.00
21.93
81.05
81.05
Median
Average
2 S.D.+
2 S.D. -
16.95
0.00
50.00
17.74
2.62
46.79
27.79
8.48
65.72
7.69
-3.23
27.87
Source: Bloomberg, Reuters Global Fundamentals, IBES CONSENSUS, JPMorgan Quantitative & Derivative Strategy
52
11-Nov-16
As Of:
11.22
Local Price:
0.51
EPS:
% to Min % to Max % to Med % to Avg
-63%
0%
-38%
-35%
-73%
0%
-38%
-42%
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
JPM Q-Profile
Galaxy Entertainment Group Limited (HONG KONG / Consumer Discretionary)
As Of: 11-Nov-2016
Local Share Price
Current:
33.15
12 Mth Forward EPS
90.00
5.00
80.00
4.00
70.00
3.00
60.00
Current:
1.33
2.00
50.00
1.00
30.00
0.00
20.00
-1.00
10.00
-2.00
PE (1Yr Forward)
Current:
24.9x
60.0x
P/E Relative to Hong Kong Index
Oct/15
Current:
Jun/16
Feb/15
Oct/13
Jun/14
Feb/13
Oct/11
Jun/12
Feb/11
Oct/09
Jun/10
Feb/09
Oct/07
Jun/08
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Jun/04
Feb/03
-3.00
Oct/01
Oct/16
Jan/16
Jul/14
Apr/15
Oct/13
Jan/13
Jul/11
Apr/12
Oct/10
Jan/10
Jul/08
Apr/09
Oct/07
Jan/07
Jul/05
Apr/06
Oct/04
Jan/04
Jul/02
Apr/03
Oct/01
0.00
Jun/02
40.00
1.54
3.50
3.00
50.0x
2.50
40.0x
2.00
1.50
30.0x
1.00
0.50
20.0x
0.00
10.0x
-0.50
20%
12Mth fwd EY
4.01%
Current:
Jun/16
Oct/15
Feb/15
Jun/14
Oct/13
Feb/13
Jun/12
Oct/11
Feb/11
Jun/10
Oct/09
Feb/09
Jun/08
Oct/07
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
Oct/15
Current:
Hong Kong BY
Jun/16
Feb/15
Jun/14
Oct/13
Feb/13
Oct/11
Jun/12
Feb/11
Oct/09
Jun/10
Feb/09
Jun/08
Oct/07
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
Jun/02
Jun/02
-1.00
0.0x
0.00
14.0
Proxy
10%
12.0
0%
10.0
-10%
-20%
8.0
-30%
6.0
-40%
-50%
4.0
-60%
2.0
ROE (Trailing)
11.34
50.00
30.00
10.0x
20.00
8.0x
10.00
Current:
P/B Trailing
Jun/16
Oct/15
Feb/15
Jun/14
Oct/13
Feb/13
Jun/12
Oct/11
Feb/11
Jun/10
Oct/09
Feb/09
Jun/08
Oct/07
Price/Book (Value)
12.0x
40.00
Feb/07
Jun/06
Oct/05
Feb/05
Jun/04
Oct/03
Feb/03
0.0
Oct/01
Oct/15
Current:
Jun/16
Feb/15
Jun/14
Oct/13
Feb/13
Oct/11
Jun/12
Feb/11
Oct/09
Jun/10
Feb/09
Jun/08
Oct/07
Feb/07
Jun/06
Oct/05
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
Jun/02
-80%
Jun/02
-70%
3.3x
P/B Forward
6.0x
0.00
-10.00
4.0x
-20.00
2.0x
-30.00
0.0x
-40.00
-50.00
-2.0x
Jun/16
Oct/15
Feb/15
Jun/14
Oct/13
Feb/13
Jun/12
Oct/11
Feb/11
Jun/10
Oct/09
Feb/09
Jun/08
Oct/07
Feb/07
Jun/06
Oct/05
Feb/05
Jun/04
Oct/03
Feb/03
Oct/01
-4.0x
Jun/02
Oct/15
Jun/16
Feb/15
Oct/13
Jun/14
Jun/12
Feb/13
Oct/11
Feb/11
Oct/09
Jun/10
Feb/09
Jun/08
Oct/07
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
Jun/02
-60.00
Summary
Galaxy Entertainment Group Limited
18005.06
HONG KONG
61.186 TICKER 27 HK EQUITY
Latest
Min
Max
12mth Forward PE
24.91x
P/BV (Trailing)
0.20
10.13
3.27x
0.00
12.94
0.00
ROE (Trailing)
-48.53
41.67
11.34
Median
Average
2 S.D.+
2 S.D. -
2.10
0.00
8.72
3.10
1.05
8.84
8.25
5.80
53.47
-2.04
-3.70
-35.79
11-Nov-16
As Of:
33.15
Local Price:
1.33
EPS:
-94%
209%
-36%
-5%
-528%
267%
-23%
-22%
53
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
JPM Q-Profile
MGM China Holdings Limited (MACAU / Consumer Discretionary)
As Of: 11-Nov-2016
Local Share Price
Current:
14.66
12 Mth Forward EPS
Current:
0.55
2.50
35.00
30.00
2.00
25.00
1.50
20.00
15.00
1.00
10.00
0.50
PE (1Yr Forward)
Current:
26.5x
30.0x
Oct/15
Jun/16
Feb/15
Oct/13
Jun/14
Feb/13
Oct/11
Jun/12
Feb/11
Oct/09
Jun/10
Feb/09
Oct/07
Jun/08
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Jun/04
Feb/03
0.00
Oct/01
Oct/16
Jan/16
Jul/14
Apr/15
Oct/13
Jan/13
Jul/11
Apr/12
Oct/10
Jan/10
Jul/08
Apr/09
Oct/07
Jan/07
Jul/05
Apr/06
Oct/04
Jan/04
Jul/02
Apr/03
Oct/01
0.00
Jun/02
5.00
Current:
1.00
0.90
25.0x
0.80
0.70
20.0x
0.60
15.0x
0.50
0.40
10.0x
0.30
0.20
5.0x
0.10
12%
12Mth fwd EY
3.77%
Current:
Jun/16
Oct/15
Feb/15
Jun/14
Oct/13
Feb/13
Jun/12
Oct/11
Feb/11
Jun/10
Oct/09
Feb/09
Jun/08
Oct/07
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
Oct/15
Current:
US BY
Jun/16
Feb/15
Jun/14
Oct/13
Feb/13
Oct/11
Jun/12
Feb/11
Oct/09
Jun/10
Feb/09
Jun/08
Oct/07
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
Jun/02
Jun/02
0.00
0.0x
1.65
10.0
Proxy
9.0
10%
8.0
7.0
8%
6.0
5.0
6%
4.0
4%
3.0
2.0
2%
1.0
ROE (Trailing)
54.49
60.00
Price/Book (Value)
Current:
25.0x
P/B Trailing
Jun/16
Oct/15
Feb/15
Jun/14
Oct/13
Feb/13
Jun/12
Oct/11
Feb/11
Jun/10
Oct/09
Feb/09
Jun/08
Oct/07
Feb/07
Jun/06
Oct/05
Feb/05
Jun/04
Oct/03
Feb/03
Oct/01
0.0
Jun/02
Oct/15
Current:
Jun/16
Feb/15
Jun/14
Oct/13
Feb/13
Oct/11
Jun/12
Feb/11
Oct/09
Jun/10
Feb/09
Jun/08
Oct/07
Feb/07
Jun/06
Oct/05
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
Jun/02
0%
9.5x
P/B Forward
40.00
20.0x
20.00
15.0x
0.00
10.0x
-20.00
-40.00
5.0x
Jun/16
Oct/15
Feb/15
Jun/14
Oct/13
Feb/13
Jun/12
Oct/11
Feb/11
Jun/10
Oct/09
Feb/09
Jun/08
Oct/07
Feb/07
Jun/06
Oct/05
Feb/05
Jun/04
Oct/03
Feb/03
Oct/01
0.0x
Jun/02
Oct/15
Jun/16
Feb/15
Oct/13
Jun/14
Jun/12
Feb/13
Oct/11
Feb/11
Oct/09
Jun/10
Feb/09
Jun/08
Oct/07
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
Jun/02
-60.00
Summary
MGM China Holdings Limited
MACAU
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
7358.24
7.641509 TICKER 2282 HK
Latest
Min
Max
26.53x
6.49
23.17
9.45x
0.00
8.67
1.65
-47.52
54.49
54.49
Median
Average
2 S.D.+
2 S.D. -
12.12
2.98
50.00
13.38
3.40
36.12
22.93
8.20
104.83
3.83
-1.39
-32.59
54
11-Nov-16
As Of:
14.66
Local Price:
0.55
EPS:
-31%
-100%
-187%
145%
425%
0%
28%
81%
-8%
42%
106%
-34%
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
JPM Q-Profile
Sands China Ltd. (MACAU / Consumer Discretionary)
As Of: 11-Nov-2016
Local Share Price
Current:
35.10
12 Mth Forward EPS
70.00
0.60
60.00
0.50
50.00
0.40
40.00
0.30
30.00
0.20
20.00
0.10
10.00
Current:
0.19
0.00
PE (1Yr Forward)
Current:
24.3x
40.0x
Oct/15
Jun/16
Feb/15
Oct/13
Jun/14
Feb/13
Oct/11
Jun/12
Feb/11
Oct/09
Jun/10
Feb/09
Oct/07
Jun/08
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
-0.10
Jun/02
Oct/16
Jan/16
Jul/14
Apr/15
Oct/13
Jan/13
Jul/11
Apr/12
Oct/10
Jan/10
Jul/08
Apr/09
Oct/07
Jan/07
Jul/05
Apr/06
Oct/04
Jan/04
Jul/02
Apr/03
Oct/01
0.00
Current:
1.00
35.0x
0.90
30.0x
0.80
0.70
25.0x
0.60
20.0x
0.50
0.40
15.0x
0.30
10.0x
4.12%
ROE (Trailing)
23.79
45.00
Current:
Jun/16
Oct/15
Feb/15
Jun/14
Oct/13
Feb/13
Jun/12
Oct/11
Feb/11
Jun/10
Oct/09
Feb/09
Jun/08
Oct/07
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Price/Book (Value)
5.91
Current:
14.0x
P/B Trailing
40.00
Jun/16
Oct/15
Feb/15
Jun/14
Oct/13
Feb/13
Jun/12
Oct/11
Feb/11
Jun/10
Oct/09
Feb/09
Jun/08
Oct/07
Feb/07
Jun/06
Oct/05
Feb/05
Jun/04
Oct/03
Oct/01
Oct/15
Current:
Jun/16
Feb/15
Jun/14
Oct/13
Feb/13
Oct/11
Jun/12
Feb/11
Oct/09
Jun/10
Feb/09
Jun/08
0.0
Oct/07
1.0
0%
Feb/07
2.0
1%
Jun/06
3.0
2%
Oct/05
4.0
3%
Feb/05
5.0
4%
Oct/03
6.0
5%
Jun/04
7.0
6%
Feb/03
8.0
7%
Oct/01
Jun/04

9.0
Proxy
8%
Jun/02
Feb/03
Oct/01
Oct/15
Jun/16
Feb/15
Jun/14
Oct/13
Current:
US BY
Feb/03
12Mth fwd EY
Jun/02
9%
Feb/13
Oct/11
Jun/12
Feb/11
Oct/09
Jun/10
Feb/09
Jun/08
Oct/07
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
0.00
Jun/02
0.10
0.0x
Jun/02
0.20
5.0x
8.4x
P/B Forward
12.0x
35.00
30.00
10.0x
25.00
8.0x
20.00
6.0x
10.00
4.0x
5.00
2.0x
Jun/16
Oct/15
Feb/15
Jun/14
Oct/13
Feb/13
Jun/12
Oct/11
Feb/11
Jun/10
Oct/09
Feb/09
Jun/08
Oct/07
Feb/07
Jun/06
Oct/05
Feb/05
Jun/04
Oct/03
Feb/03
0.0x
Oct/01
Oct/15
Jun/16
Feb/15
Jun/14
Oct/13
Jun/12
Feb/13
Oct/11
Feb/11
Oct/09
Jun/10
Feb/09
Jun/08
Oct/07
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
Jun/02
0.00
Jun/02
15.00
Summary
Sands China Ltd.
MACAU
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
36727.42
72.11253 TICKER 1928 HK
Latest
Min
Max
24.30x
2.65
11.62
8.45x
0.00
8.55
5.91
8.69
39.56
23.79
Median
Average
2 S.D.+
2 S.D. -
5.63
3.45
21.92
6.20
3.62
23.39
10.58
8.59
40.43
1.82
-1.36
6.34
11-Nov-16
As Of:
35.10
Local Price:
0.19
EPS:
-69%
-100%
-63%
38%
45%
66%
-33%
-42%
-8%
-27%
-39%
-2%
55
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
JPM Q-Profile
Melco International Development Limited (HONG KONG / Consumer Discretionary)
As Of: 11-Nov-2016
12 Mth Forward EPS
30.00
2.00
25.00
1.50
20.00
1.00
15.00
0.50
10.00
0.00
5.00
-0.50
PE (1Yr Forward)
Current:
43.6x
60.0x
Current:
0.24
Oct/15
Current:
Jun/16
Feb/15
Oct/13
Jun/14
Feb/13
Oct/11
Jun/12
Feb/11
Oct/09
Jun/10
Feb/09
Oct/07
Jun/08
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
-1.00
Oct/01
Oct/16
Jan/16
Jul/14
Apr/15
Oct/13
Jan/13
Jul/11
Apr/12
Oct/10
Jan/10
Jul/08
Apr/09
Oct/07
Jan/07
Jul/05
Apr/06
Oct/04
Jan/04
Jul/02
Apr/03
Oct/01
0.00
Jun/04
10.64
Feb/03
Current:
Jun/02
Local Share Price
2.70
4.00
3.50
50.0x
3.00
2.50
40.0x
2.00
30.0x
1.50
1.00
20.0x
0.50
0.00
10.0x
-0.50
15%
12Mth fwd EY
2.29%
Current:
Jun/16
Oct/15
Feb/15
Jun/14
Oct/13
Feb/13
Jun/12
Oct/11
Feb/11
Jun/10
Oct/09
Feb/09
Jun/08
Oct/07
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
Oct/15
Current:
Hong Kong BY
Jun/16
Feb/15
Jun/14
Oct/13
Feb/13
Oct/11
Jun/12
Feb/11
Oct/09
Jun/10
Feb/09
Jun/08
Oct/07
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
Jun/02
Jun/02
-1.00
0.0x
0.00
2.0
Proxy
1.8
10%
1.6
1.4
5%
1.2
1.0
0%
0.8
-5%
0.6
0.4
-10%
0.2
ROE (Trailing)
59.50
60.00
Current:
P/B Trailing
Jun/16
Oct/15
Feb/15
Jun/14
Oct/13
Feb/13
Jun/12
Oct/11
Feb/11
Jun/10
Oct/09
Feb/09
Jun/08
Oct/07
Price/Book (Value)
7.0x
50.00
Feb/07
Jun/06
Oct/05
Feb/05
Jun/04
Oct/03
Feb/03
Oct/01
0.0
Jun/02
Oct/15
Current:
Jun/16
Feb/15
Jun/14
Oct/13
Feb/13
Oct/11
Jun/12
Feb/11
Oct/09
Jun/10
Feb/09
Jun/08
Oct/07
Feb/07
Jun/06
Oct/05
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
Jun/02
-15%
0.7x
P/B Forward
6.0x
40.00
5.0x
30.00
4.0x
10.00
3.0x
0.00
2.0x
-10.00
1.0x
-20.00
0.0x
-30.00
-1.0x
Jun/16
Oct/15
Feb/15
Jun/14
Oct/13
Feb/13
Jun/12
Oct/11
Feb/11
Jun/10
Oct/09
Feb/09
Jun/08
Oct/07
Feb/07
Jun/06
Oct/05
Feb/05
Jun/04
Oct/03
Feb/03
-2.0x
Oct/01
Oct/15
Jun/16
Feb/15
Oct/13
Jun/14
Jun/12
Feb/13
Oct/11
Feb/11
Oct/09
Jun/10
Feb/09
Jun/08
Oct/07
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
Jun/02
-40.00
Jun/02
20.00
Summary
Melco International Development Limited 2121.57
HONG KONG
3.587484 TICKER 200 HK
Latest
Min
Max
12mth Forward PE
43.64x
P/BV (Trailing)
0.17
6.42
0.73x
0.00
1.81
0.00
ROE (Trailing)
-30.48
59.50
59.50
Median
Average
2 S.D.+
2 S.D. -
1.18
0.10
4.00
1.71
0.25
7.05
4.30
1.06
47.28
-0.89
-0.55
-33.18
56
11-Nov-16
As Of:
10.64
Local Price:
0.24
EPS:
-76%
774%
61%
132%
-151%
0%
-93%
-88%
15 November 2016
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com
Sean Zhuang
(852) 2800-8512
JPM Q-Profile
SJM Holdings Limited (HONG KONG / Consumer Discretionary)
As Of: 11-Nov-2016
12 Mth Forward EPS
30.00
2.50
25.00
2.00
20.00
1.50
15.00
1.00
10.00
0.50
5.00
0.00
PE (1Yr Forward)
Current:
21.5x
25.0x
Current:
0.25
Oct/15
Current:
Jun/16
Feb/15
Oct/13
Jun/14
Feb/13
Oct/11
Jun/12
Feb/11
Oct/09
Jun/10
Feb/09
Oct/07
Jun/08
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
-0.50
Oct/01
Oct/16
Jan/16
Jul/14
Apr/15
Oct/13
Jan/13
Jul/11
Apr/12
Oct/10
Jan/10
Jul/08
Apr/09
Oct/07
Jan/07
Jul/05
Apr/06
Oct/04
Jan/04
Jul/02
Apr/03
Oct/01
0.00
Jun/04
5.44
Feb/03
Current:
Jun/02
Local Share Price
1.33
1.60
1.40
20.0x
1.20
1.00
15.0x
0.80
10.0x
0.60
0.40
5.0x
0.20
12%
12Mth fwd EY
4.64%
Current:
Jun/16
Oct/15
Feb/15
Jun/14
Oct/13
Feb/13
Jun/12
Oct/11
Feb/11
Jun/10
Oct/09
Feb/09
Jun/08
Oct/07
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
Oct/15
Current:
Hong Kong BY
Jun/16
Feb/15
Jun/14
Oct/13
Feb/13
Oct/11
Jun/12
Feb/11
Oct/09
Jun/10
Feb/09
Jun/08
Oct/07
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
Jun/02
Jun/02
0.00
0.0x
3.91
14.0
Proxy
12.0
10%
10.0
8%
8.0
6%
6.0
4%
4.0
2%
2.0
ROE (Trailing)
7.58
60.00
Price/Book (Value)
Current:
9.0x
P/B Trailing
Jun/16
Oct/15
Feb/15
Jun/14
Oct/13
Feb/13
Jun/12
Oct/11
Feb/11
Jun/10
Oct/09
Feb/09
Jun/08
Oct/07
Feb/07
Jun/06
Oct/05
Feb/05
Jun/04
Oct/03
Feb/03
Oct/01
0.0
Jun/02
Oct/15
Current:
Jun/16
Feb/15
Jun/14
Oct/13
Feb/13
Oct/11
Jun/12
Feb/11
Oct/09
Jun/10
Feb/09
Jun/08
Oct/07
Feb/07
Jun/06
Oct/05
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
Jun/02
0%
1.3x
P/B Forward
8.0x
50.00
7.0x
40.00
6.0x
5.0x
30.00
4.0x
3.0x
20.00
2.0x
10.00
1.0x
0.0x
Jun/16
Oct/15
Feb/15
Jun/14
Oct/13
Feb/13
Jun/12
Oct/11
Feb/11
Jun/10
Oct/09
Feb/09
Jun/08
Oct/07
Feb/07
Jun/06
Oct/05
Feb/05
Jun/04
Oct/03
Feb/03
Oct/01
-1.0x
Jun/02
Oct/15
Jun/16
Feb/15
Jun/14
Oct/13
Jun/12
Feb/13
Oct/11
Feb/11
Oct/09
Jun/10
Feb/09
Jun/08
Oct/07
Feb/07
Oct/05
Jun/06
Feb/05
Oct/03
Jun/04
Feb/03
Oct/01
Jun/02
0.00
Summary
SJM Holdings Limited
HONG KONG
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
3967.52
8.4621 TICKER 880 HK
Latest
Min
Max
21.54x
0.10
7.87
1.30x
0.00
13.14
3.91
7.58
50.00
7.58
Median
Average
2 S.D.+
2 S.D. -
3.69
3.08
30.46
3.66
3.59
28.52
7.75
8.50
53.99
-0.43
-1.32
3.04
11-Nov-16
As Of:
5.44
Local Price:
0.25
EPS:
-92%
-100%
0%
505%
236%
559%
184%
-21%
302%
181%
-8%
276%
57
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com

15 November 2016
Sean Zhuang
(852) 2800-8512
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J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the
average total return of the stocks in the analysts (or the analysts teams) coverage universe.] Neutral [Over the next six to twelve
months, we expect this stock will perform in line with the average total return of the stocks in the analysts (or the analysts teams)
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Coverage Universe: Kim, DS: Bloomberry Resorts Corp (BLOOM.PS), Galaxy Entertainment (0027.HK), Genting Berhad (GENT.KL),
Genting Malaysia (GENM.KL), Genting Singapore (GENS.SI), Grand Korea Leisure (GKL) (114090.KS), Kangwon Land (035250.KS),
MGM China (2282.HK), Melco Crown Philippines (MCP.PS), Melco International (0200.HK), Paradise Co (034230.KQ), SJM Holdings
(0880.HK), Sands China (1928.HK), Travellers International Hotel Group Inc (RWM.PS), Wynn Macau (1128.HK)
J.P. Morgan Equity Research Ratings Distribution, as of October 03, 2016
J.P. Morgan Global Equity Research Coverage

IB clients*
JPMS Equity Research Coverage
IB clients*
Overweight
(buy)
42%
51%
42%
68%
Neutral
(hold)
46%
48%
50%
61%
Underweight
(sell)
12%
34%
8%
43%
*Percentage of investment banking clients in each rating category.

For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold
rating category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table
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Other Disclosures
58
DS Kim
(852) 2800-8597
ds.kim@jpmorgan.com

15 November 2016
Sean Zhuang
(852) 2800-8512
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Table 1: JPM ratings & PTs

Source: J.P. Morgan.

The numbers. We estimate GGR to grow +9%/+6% in FY17/18 (vs. -4% in

Asia Pacific Equity Research

Equity Ratings and Price Targets

Macau: aggregated market cap (LHS)

FY16 consensus EBITDA (LHS)

Source: J.P. Morgan estimates, Bloomberg.

But, the market seems to still be

We see a good possibility of

Asia Pacific Equity Research

Source: Company reports and J.P. Morgan estimates.

2014 1Q15 2Q15 3Q15 4Q15

Slots & ETG

2015 1Q16 2Q16 3Q16 4Q16E

2016E 1Q17E 2Q17E 3Q17E 4Q17E

9.45 1.63 1.47 1.48 1.52

Source: DICJ, Company reports, J.P. Morgan estimates.

Price Mkt cap

Share perf (%)

Div yield (%) Recurring FCF yld

'18E '16E '17E '18E

Three telltale signs of sustainable recovery

Figure 4: Quarterly GGR run-rate (GGR/day) by segments

VIP GGR (LHS)

Source: DICJ, J.P. Morgan estimates.

Mass GGR (LHS)

Slot GGR (RHS)

Source: DICJ, J.P. Morgan estimates.

Figure 5: Monthly GGR - YoY growth by segment

Source: DICJ, J.P. Morgan estimates.

Figure 6: Cotai casinos quarterly GGR and YoY growths

Figure 7: Peninsula casinos quarterly GGR and YoY growths

VIP GGR @ Cotai (LHS)

Mass GGR @ Cotai (LHS)

VIP GGR @ Peninsula (LHS)

Mass GGR @ Peninsula (LHS)

Source: J.P. Morgan estimates, Company data.

This broad-based recovery as evidenced in yoy %, qoq %, across segments and

Daily GGR (ADR)

#2. Mass growth is indeed a structural trend

Mass GGR/day (incl. slot; LHS)

Source: DICJ, Industry consultants, J.P. Morgan estimates.

Figure 10: Macau visitation & YoY

Macau visitations (Mn; LHS)

Figure 11: Chinese into Macau: overnighters vs. day-trippers

Figure 12: Chinese into Macau: Individual vs. package/group tourists

Overnight YoY % (RHS)

Day-trippers YoY % (RHS)

Package tourists (RHS)

Figure 13: China overnighters show high correlation with mass

Figure 14: so is the growth in individual travelers from China

Macau: Mass GGR YoY (incl. slots; LHS)

Source: DICJ, Company reports, DSEC.

This is driven by growing mass appeal of Macau itself. We believe the

YoY % in casino hotel rooms (ex-satellite)

YoY % in mass & slot GGR

Figure 16: Overnight tourists from mainland China: Macau vs. HK

Figure 17: Individual tourists* from mainland China: Macau vs. HK

Source: DSEC, Hong Kong Tourism Board.

Individual tourists in MACAU

Overnighters in Macau (LHS)