AsiaGaming300415e210559

Please refer to page 84 for important disclosures and analyst certification, or on our website
www.macquarie.com/research/disclosures.
GLOBAL
Inside
Search for life beyond Macau 2
Race to build Integrated Resorts 11
Following in the footsteps of the Chinese 17
Regional markets in detail 23
Macau 24
Singapore 31
Australia 37
Philippines 47
Malaysia 53
Korea 58
Japan 63
Cambodia 67
Vietnam 73
Vladivostok 75
MacVisit: NagaCorp 79
Analyst(s)
Macquarie Capital Securities Limited
Jamie Zhou, CFA
+852 3922 1147 jamie.zhou@macquarie.com
Macquarie Capital (USA) Inc.
Chad Beynon
+1 212 231 2634 chad.beynon@macquarie.com
Macquarie Capital Securities (Japan) Limited
David Gibson, CFA
+81 3 3512 7880 david.gibson@macquarie.com
Macquarie Securities Korea Limited
HongSuk Na, CFA
+82 2 3705 8678 hongsuk.na@macquarie.com
Macquarie Securities (Australia) Limited
Andrew Russell
+61 2 8232 9390 andrew.russell@macquarie.com
Macquarie Capital Securities (Singapore) Pte.
Limited
Somesh Kumar Agarwal
+65 6601 0840 somesh.agarwal@macquarie.com
Macquarie Capital Securities (Philippines) Inc.
RJ Aguirre
+63 2 857 0890 rj.aguirre@macquarie.com
Macquarie Capital Securities (Malaysia) Sdn. Bhd.
Chi Hoong Ng
+60 3 2059 8985 chihoong.ng@macquarie.com
30 April 2015
Asia gaming
Search for life beyond Macau
Asian gaming penetration by GDP and income standards remains low measured
at just 0.5% on GGR over GDP vs the developed world at >1.0%. While gaming
stocks across Asia ex-Macau are trading on just 6-12x FY16E EV/EIBTDA vs.
Macau at 14x, not all markets offer attractive risk-rewards for investors. We are
bullish on two themes: 1) integrated resorts build out on robust domestic demand
and supportive government policies (Philippines); and 2) beneficiary of outbound
Chinese gamblers (Australia, Korea and Cambodia). We also like GENM for
cheap core property valuation (7.7x EV/EBITDA), with new theme park opening.
Philippines the winner in regional Integrated Resorts race
Casino operators around Asia plan capex of close to US$50bn through the end
of the decade to build Integrated Resorts (IR). Total supply will more than double
based on room count by 2020. While there are concerns on the rising
competition to emerge as the next Macau, we think Philippines is the best-
positioned in the region, thanks to: 1) strong domestic gaming potential; 2)
Entertainment City build-out along with infrastructure improvement to rival that of
Cotai’s; and 3) supportive policy (locals allowed, no concession risks).
Chinese players are heading to Australia, Korea, Cambodia
We are structurally negative on the shrinking Chinese VIP GGR pie, but we
recognize regional gaming destinations are picking up, attracting Chinese
players who would otherwise have gone to Macau. Of the US$10bn of GGR
shrinkage likely in Macau this year (-24% YoY on our forecast), 7% or US$750m
is likely to end up in Australia, Korea and Cambodia. These markets are
expanding on a very low base and are well-positioned to tap the growing
demand from Chinese outbound gamblers whose junkets attract much higher
commissions elsewhere (up to 2% of rolling) than in Macau (1.25%).
Regional top picks: Bloomberry and Genting Malaysia
Our regional top picks are: Bloomberry and Genting Malaysia for strength of
domestic gaming. We also like Echo and GKL for a play on outbound Chinese
gamblers in Australia and Korea. We continue to be negative on Sands China,
Galaxy and Genting Singapore on structural decline in Chinese VIP market.
Macquarie Asia Pacific gaming coverage
Price TP 12m Mkt Cap PER (x) EV/EBITDA (x)
Ticker Company Rec lc lc TSR US$m CY15E CY16E CY15E CY16E
1928 HK Sands China UP 32.00 21.00 -34% 33,313 22.1 31.1 14.6 16.2
27 HK Galaxy UP 37.65 26.40 -30% 20,670 28.4 35.3 17.3 17.2
1128 HK Wynn Macau UP 16.14 14.80 -8% 10,820 27.7 21.6 16.5 12.4
880 HK SJM N 9.95 11.30 14% 7,262 12.7 15.5 6.0 6.5
MPEL US Melco Crown N 20.75 22.20 7% 11,281 32.6 29.2 13.3 11.4
2282 HK MGM China N 14.72 17.00 15% 7,217 16.0 14.6 11.8 9.5
035250 KS Kangwon Land N 37,700 33,000 -12% 7,529 17.0 15.2 10.3 9.4
034230 KS Paradise OP 25,050 29,000 16% 2,127 24.0 19.7 12.5 10.1
114090 KS GKL OP 40,000 48,000 20% 2,310 17.7 14.9 10.2 8.6
GENS SP Genting Singapore UP 1.02 0.80 -22% 9,314 23.2 21.8 8.4 8.1
GENM MK Genting Malaysia OP 4.38 5.29 21% 6,979 18.3 16.2 10.0 9.1
RWM PM Travellers Int’l OP 6.78 8.80 30% 2,409 16.0 15.4 7.2 6.4
MCP PM Melco Philippines OP 9.10 11.40 25% 1,012 32.7 18.1 7.9 5.8
PLC PM Premium Leisure OP 1.64 2.00 22% 1,170 26.6 15.0 14.7 9.4
BLOOM PM Bloombery OP 11.50 14.30 24% 2,862 20.0 15.5 10.2 8.6
CWN AU Crown Resorts OP 13.27 17.00 28% 7,731 16.6 15.6 12.8 11.7
EGP AU Echo OP 4.52 5.10 13% 2,985 17.3 17.5 8.3 8.2
Source: Bloomberg, Macquarie Research, April 2015. Price date: Apr 29, 2015.

Macquarie Research Asia gaming
30 April 2015 2
Search for life beyond Macau
Regional top picks: BLOOM, GENM
Asian gaming is a US$62bn market (strictly casino tables and slots) in 2014 and only $19bn
outside of Macau. As a percentage of local GDP, it is underpenetrated (<0.5%) vs developed
world (>1%) but we advise investors to be selective, and invest in markets with robust
domestic demand and favourable gaming policies. Our regional top picks are Bloomberry
(operator of the Solaire in Manila) and Genting Malaysia (Resort World Highland in Kuala
Lumpur).
We are in the midst of a major investment boom across Asian gaming markets to build
integrated resorts (IRs). Operators are pouring in up to US$50bn capex through the end of
the decade to build the next Macau. We think Philippines is the best-placed country in the
region to emerge as the next gaming destination. The infrastructure improvement planned
along with Entertainment City build-out is envisaged to rival that of Cotai’s, and most
importantly, government policies are supportive of gaming, where locals drive majority of
business and operators don’t face similar concession risks elsewhere.
Bloomberrry (BLOOM PM, Outperform)
Among Philippine gaming exposures, we like Bloomberry the most, given it has proven it's
capable of delivering results even with the challenges of having no foreign operator or partner.
They have delivered on the VIP segment, which has boosted overall volume last year. With
new capacity added (mostly going to junket rooms), we remain confident about its ability to
ramp up revenues in the next few years. We see limited downside risks to volume growth
given strong partnerships with Junkets and Solaire's unique positioning in the high-end
segment, and still having a formidable local following. While overall sentiment towards VIP in
the region, we believe Solaire has achieved scale and would maintain strong growth backed
by local volume. The stock is trading at 8.7x 2016E EBITDA on 29% earnings CAGR over
2014-2017E.
Genting Malaysia (GENM MK, Outperform)
Most investors view GENM’s core asset, Genting Highlands, as a mature asset with stagnant
EBITDA growth for the past 5 years, but we are expecting a change and forecast it to grow at
7.3% annually for the next 3 years. The key catalyst for the stock will be its improving
visitation and revenue as the USD$1.4bn makeover, including the world’s first 20th
Century
Fox theme park. Demand growth, we believe, is dependent not on Western or Chinese
tourists, but locals, and possibly tourists from Indonesia and Singapore. At core FY16E
EV/EBITDA of 7.7x, we don’t think investors have factored in the upside.
Fig 1 Asia-Pacific gaming is a US62bn market (table
games and slot machine only) Fig 2 Philippines offers the highest growth potential
Source: Company data, various sources, Macquarie Research, April 2015 Source: Various govt gaming bureaus, Macquarie Research, April 2015
43.9
5.9
4.5
2.7 1.5 1.4 1.3 0.3
0
5
10
15
20
25
30
35
40
45
50
GGR (US$bn) - 2014
9% 9%
0%
6%
27%
-1%
15%
-1%
-5%
0%
9%
19%
5%
17%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
2011-2014 2014-2017E
3-yr GGR CAGR
We like markets
with integrated
resorts build-out
plans along with
strong local demand
supported by
government policies

30 April 2015 3
Capturing outbound Chinese players: Echo, GKL, Naga
We are structurally negative on the shrinking Chinese VIP GGR pie, but we recognize
regional gaming destinations are picking up, attracting Chinese players who would otherwise
have gone to Macau. Of the US$10bn of GGR shrinkage likely in Macau this year (-24% YoY
on our forecast), 7% or US$750m is likely to end up in Australia, Korea and Cambodia. These
markets are expanding on a very low base and are well-positioned to tap the growing demand
from Chinese outbound gamblers. Junkets are facilitating this trend, taking their best
customers elsewhere from Macau, attracted by much higher commissions (up to 2% of
rolling) compared to Macau (capped at 1.25%). The best plays on this structural trend, in our
view, are Echo Entertainment (operator of the Star in Sydney) and GKL in Korea.
Fig 3 Total Chinese GGR down 21%, growth in non-
Macau Asia only a fraction of Macau’s $10bn decline!
Fig 4 Junkets are taking their best customers
elsewhere, incentivised by much higher commission
Source: Company data, Macquarie Research, April 2015 Source: Macquarie Research, April 2015
Echo Entertainment (EGP AU, Outperform)
Within the Australian casino sector, Echo remains our top pick, offering the most leverage to
an uptick in VIP gaming. In addition, Echo offers notable room for operating leverage
improvement across both The Star and the firm’s Queensland properties as management
continue to build on recent operational momentum, especially on the main gaming floor at
The Star. With net debt falling to just 1.0x EBITDA as at the last half, we view Echo as well
positioned to boost capex commitments or capital returns to investors.
Grand Korea Leisure (114090 KS, Outperform)
We like GKL for its resilient earnings growth outlook as well as upside on potentially winning
the license to build a new integrated resort in Incheon. Despite concerns over the regional
gaming industry, we forecast GKL’s earnings growth will remain solid on the back of: 1) little
dependence on junkets; 2) different feeder market (NE Asia) from other regional competitors.
The Korean government is to issue two new casino licenses for integrated resorts (IRs) near
Incheon by end-FY15, and we think GKL, as a semi-govt company, is likely to win one of the
two licenses. GKL is trading at 10x FY15E EV/EBITDA, an appealing level considering the
average 20% EBITDA growth we expect for the next two years.
NagaCorp (3918 HK, not rated)
We also find NagaCorp interesting. The company monopolizes the gaming industry in
Cambodia’s capital city and is seeing very strong uptick in VIP revenue from inbound Chinese
gamblers. Naga will be adding two more Macau junkets by offering them higher commission
than Macau’s, doubling capacity with its Naga2 project, while adding direct flights to bring
Chinese to Phnom Penh.
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
0
5
10
15
20
25
30
35
40
45
50
2011 2012 2013 2014 2015E 2016E 2017E
Macau Non-Macau YoY total Chinese
GGR from Chinese (US$bn) YoY change in Chinese GGR
1.3%
1.8%
1.5%
2.0% 2.0%
1.5%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
2.2%
Junket commission as % of VIProlling
junkets
not
allowed
does
not
disclose
Australia, Korea and
Cambodia are the
beneficiaries of
Chinese outbound
gamblers

30 April 2015 4
Remain negative on Macau and Singapore
On the other hand, Macau and Singapore will continue to see structural decline in Chinese
VIP (and premium mass) business. Both markets were heavily reliant on Chinese players and
have the most to lose.
Galaxy (27 HK, Underperform)
Galaxy is our Macquarie Marquee Sell in the Macau gaming sector. We are cautious on the
name for: 1) highest VIP exposure in the sector (>70% of GGR), while the VIP segment is in
structural decline, 2) most aggressive capex plan with at least US$10bn to be spent over the
next five years and 3) first to open in a tough market is a negative because Galaxy’s fixed
cash operating cost will jump by 40% upon opening and eat into cash flow. The stock is
expensive on 16x FY16E EV/EBITDA, considering its (modest) special dividend yield of 1.2%.
Sands China (1928 HK, Underperform)
We are structurally negative on Macau, and Sands China is no exception as the 1Q15 results
indicate: even grind mass is declining at -20% YoY, a segment that was thought to be
resilient in this downturn and was expected to eventually drive Macau’s recovery. Parisian’s
delay til the end of 2016 means market share loss to competitors’ property openings in the
coming 12 months. Sands is expensive at 17x FY16E EV/EBITDA. Consensus is grossly
overestimating dividend yield at 6-7%, in our view, which seems to be supporting valuation
even in light of weakening fundamentals. We see 2.5% dividend yield with downside as FCF
is turning negative.
Genting Singapore (GENS SP, Underperform)
We are structurally negative on the Singapore gaming market as they approached maturity
within 2 years of opening (due to tight government regulations and lack of junkets) and are in
a state of decline (due to the crackdown in China on SME bosses who make up ~50% of
Singapore VIP market, and the opening of regional casinos in Philippines and Korea) in our
view. Genting Singapore is set to suffer even more, in our view, due to the aggressive ‘direct
credit extension’ policy it adopted in the last 3 years (lent direct credit to VIP players to win
market share). A decline in market VIP volumes coupled with high bad debts (arising from
past direct credit which cannot be collected) will lead to erosion of growth and returns for
GENS, in our view. GENS is trading at 8.5x 2015E EV / EBITDA on our current estimates
with 10-15% downside risk to our numbers. It is much more expensive than steady state
mature market casinos like Echo, Skycity and Genting Malaysia who are all trading between
6-8x EV / EBITDA. We believe it is unfair to compare GENS with high-growth or “cyclical
decline” markets like Macau or the US.
We are structurally
cautious on Chinese
VIP gambling;
Macau and
Singapore will
continue to suffer

MacquarieResearchAsiagaming
30April20155
Fig 5 Asia gaming snapshot
Macau Singapore Australia Philippines Malaysia Korea Cambodia Vietnam Vladivostok
MARKET LANDSCAPE
# of casinos 35 2 13 19 1 17 26 7 3 (Under
construction)
# of integrated resorts 6 2 2 3 1 1 1 1
# of tables 5,711 1,300 1666 842 600 915 1,164 199 385 (planned)
# of slots 13,018 5,000 196,742 total,
13,008 in casinos
4,500 4,000 2,328 3,414 NA 1,800 (planned)
2014 inbound
visitation (’000s)
31,526 15,100 6,581 4,833 27,437 14,198 4,002 7,874 ~250
% Chinese 67% 30% 12% 8% 6% 43% 13% 25% ~ 80%
2014 GGR
breakdown
VIP 60% 49% 26% 49% 60% 81% 50% 74%
Mass 40% 51% 74% 51% 40% 19% 50% 26%
VIP min chip buy-in HK$1 million
(US$130,000)
S$100,000
(US$80,000)
A$75,000
(US$55,000)
Does not
disclose
US$30,000 US$15,000 RMB100,000
(US$15,000)
TBD
Mass table min bet
(table Baccarat)
HK$500 (US$65) S$25 (US$20) A$20 (US$15) PHP300 (US$7) RM50 (US$13) US$20 US$40 RMB10 (US$1.5)
for Donaco
TBD
VIP junket
commission
Capped at 1.25%
rolling chips
Junkets not
allowed
1.4-1.8% of rolling,
or ~50% of GGR
1.5% of rolling or
20% of GGR
Higher than
Macau’s
1.5-2.0% of rolling
chips
70% GGR share
(~2% of rolling)
1.5% of rolling TBD
Mass customer cash
rebate
Up to 1% of rolling
(SJM only)
No No Up to 1.25% of
rolling
No No No Up to 1% of
rolling
TBD
Casinos extending
credit to players?
Negligible Yes, GENS in
particular
Yes, though with
tight limits
Yes No Yes Yes Donaco doesn't TBD
GAMING REGULATIONS
Regulation Agency Gaming Inspection
and Coordination
Bureau (DICJ)
Casino
Regulatory
Authority
State
governments
Philippine
Amusement And
Gaming
Corporation
Ministry of
Finance
Ministry of Culture,
Sports, Tourism
Ministry of
Economy and
Finance
Ministry of Finance Vladivostok
Government
Concession fees and
minimum investment
commitment
US$ 0.5-1.1bn for
each concessionaire
S$3.9bn (MBS) NA US$1bn minimum
investment
required
NA License base (fee
negligible)
US$ 30,000 US$ 4bn
investment
requirement
NA
Concession period 20 years 30 years NA 25 years NA Infinite 70 years (Naga) 30 years Infinite
Concession expire 2020-2022 2036 NA 2033 Renewed every 3
months
2065 (Naga)
Gaming tax VIP 39% 5% gaming tax 10-12% 15% 25% 13.4% Fee based on # of
tables, effectively
~1% of GGR
35% US$ 3,917 per
table per month
Mass 39% 15% gaming tax Approx. 28% 25% 25% 13.4% 35% US$ 235 per slot
per month
Corp tax 0% 17% 29% 0% 25% 24% 0% 22% 20%
Other taxes 6.54% GST 2% heritage fee 6% GST
implemented in
Apr 2015
25% levied on
PBT at Kangwon
Land only
Locals allowed? Allowed Locals are levied
S$100 entry fee
Allowed Allowed Allowed except for
local Muslims
Only Kangwon
Land allows
Not encouraged
but no strict control
Not allowed Not allowed
Potential policy
changes
Restricting
Chinese visitation
End of exclusivity
provision in 2017
could mean a third
license
No change There is always a
risk of another
casino license
Loosening on
foreigner-only
casinos
Increase in
gaming tax, new
licenses after
2018
Corporate tax will
be lowered to 20%
by 2016
Source: Various government sources, company data, Macquarie Research, April 2015

MacquarieResearchAsiagaming
30April20156
Fig 6 Asia gaming valuation comparables
Price TP ∆ Mkt Cap PER (x) EV/EBITDA (x)
EBITDA
CAGR (%)
EBITDA
margin ROE (%) FCF Yield (%) Div Yield (%) P/Bk
Net
D/E
Ticker Company Rec lc lc % US$m CY15E CY16E CY15E CY16E FY14-16E CY15E CY15E CY16E CY15E CY16E CY15E CY16E FY14 FY14
Macau
1928 HK Sands China UP 32.00 21.00 -34% 33,313 22.1 31.1 14.6 16.2 -19.8 30.7 22.6 15.4 -1.2 1.8 3.2 2.6 5.2 10
27 HK Galaxy UP 37.65 26.40 -30% 20,670 28.4 35.3 17.3 17.2 -19.4 14.5 14.2 10.6 -5.2 -4.6 1.4 1.1 4.2 -24
1128 HK Wynn Macau UP 16.14 14.80 -8% 10,820 27.7 21.6 16.5 12.4 -6.4 24.4 38.1 38.7 -7.9 -2.5 1.4 1.9 11.9 111
880 HK SJM N 9.95 11.30 14% 7,262 12.7 15.5 6.0 6.5 -18.4 10.1 17.3 13.0 -7.7 -16.5 4.0 2.6 2.3 -92
MPEL US Melco Crown N 20.75 22.20 7% 11,281 32.6 29.2 13.3 11.4 1.0 25.3 7.9 8.4 -4.5 6.9 0.9 1.0 2.7 46
2282 HK MGM China N 14.72 17.00 15% 7,217 16.0 14.6 11.8 9.5 -6.1 24.6 46.8 39.1 -8.9 -10.9 2.2 2.4 8.8 -2
Average 20.8 21.9 14.4 14.1 -11.5 21.6 24.5 20.9 -4.4 -2.0 2.2 1.9 4.2 8
Asia regional
035250 KS Kangwon Land N 37,700 33,000 -12% 7,529 17.0 15.2 10.3 9.4 12.2 39.7 16.1 16.3 5.7 5.8 3.2 3.4 2.9 -44
034230 KS Paradise OP 25,050 29,000 16% 2,127 24.0 19.7 12.5 10.1 32.8 19.2 9.3 10.9 -2.2 -0.4 2.4 2.8 2.3 -48
114090 KS Grand Korea Leisure OP 40,000 48,000 20% 2,310 17.7 14.9 10.2 8.6 19.9 31.1 30.0 30.2 5.2 7.0 3.0 3.5 5.7 -118
GENS SP Genting Singapore UP 1.02 0.80 -22% 9,314 23.2 21.8 8.4 8.1 0.4 37.8 7.0 7.1 2.5 4.2 1.0 1.0 1.7 -18
GENM MK Genting Malaysia OP 4.38 5.29 21% 6,979 18.3 16.2 10.0 9.1 9.4 26.1 8.1 8.5 3.8 6.1 1.5 1.7 1.5 -7
RWM PM Travellers International OP 6.78 8.80 30% 2,409 16.0 15.4 7.2 6.4 12.7 49.2 16.0 14.7 15.1 16.3 1.3 1.3 2.7 -17
MCP PM Melco Crown Philippines OP 9.10 11.40 25% 1,012 32.7 18.1 7.9 5.8 NA 24.1 9.1 14.6 7.0 -4.5 0.0 0.0 3.1 45
PLC PM Premium Leisure OP 1.64 2.00 22% 1,170 26.6 15.0 14.7 9.4 101.0 96.4 12.1 20.6 4.5 6.5 3.0 5.3 3.3 -17
BLOOM PM Bloomberry OP 11.50 14.30 24% 2,862 20.0 15.5 10.2 8.6 26.5 45.5 25.7 25.3 7.8 8.8 0.0 0.0 6.0 108
Average 19.1 15.5 9.6 8.1 32.3 46.0 15.1 16.6 5.6 5.4 1.8 2.3 2.6 -13
Australia/NZ
CWN AU Crown Resorts OP 13.27 17.00 28% 7,731 16.6 15.6 12.8 11.7 12.1 26.9 13.3 13.5 -1.4 -0.8 2.8 2.8 2.4 39
TTS AU Tatts Group OP 4.04 4.20 4% 4,719 20.2 18.7 11.7 11.2 8.3 18.3 9.8 10.3 5.0 5.6 4.7 5.0 2.0 23
ALL AU Aristocrat Leisure UP 8.41 7.20 -14% 4,263 20.6 17.8 9.7 8.5 72.0 33.5 33.8 35.1 1.7 3.5 3.7 4.2 7.5 -24
TAH AU Tabcorp OP 4.91 4.90 0% 3,257 20.3 17.8 9.1 8.7 6.6 24.9 13.4 15.3 6.2 6.5 7.7 5.7 2.6 65
EGP AU Echo OP 4.52 5.10 13% 2,985 17.3 17.5 8.3 8.2 9.3 22.2 7.1 6.7 2.7 1.5 2.3 2.4 1.3 22
AGI AU Ainsworth Game OP 2.75 4.10 49% 709 12.4 10.8 8.5 6.9 15.1 35.2 26.3 26.1 4.6 7.7 4.2 4.7 3.8 -30
SKC NZ SKYCITY N 4.11 3.80 -8% 1,838 17.8 15.6 9.8 8.7 14.6 32.9 16.6 17.4 -2.0 -4.0 4.9 5.1 3.1 78
Average 17.4 15.8 9.8 8.9 19.7 27.7 17.2 17.8 2.4 2.9 4.3 4.3 2.5 25
US
LVS US Las Vegas Sands OP 52.90 62.00 17% 42,248 18.6 15.1 11.4 9.9 -3.9 33.6 18.9 18.9 1.6 6.4 4.9 4.9 3.9 71
WYNN US Wynn Resorts N 108.77 120.00 10% 11,043 26.8 15.5 12.9 10.2 -0.2 29.0 104.5 74.6 -9.4 -2.2 2.8 1.8 52.0 2446
MGM US MGM Resorts OP 21.11 29.00 37% 10,372 32.9 18.8 9.3 8.4 6.3 23.4 8.2 12.2 -5.8 -6.1 0.0 0.0 2.5 139
CZR US Caesars N 9.37 10.00 7% 1,356 nmf nmf 10.7 9.9 13.5 23.3 22.5 18.6 -37.1 -21.2 0.0 0.0 nmf nmf
PNK US Pinnacle OP 36.69 42.00 14% 2,216 24.8 18.3 9.8 9.6 3.6 27.3 25.8 26.1 12.3 12.9 0.0 0.0 7.9 1317
BYD US Boyd N 13.14 14.00 7% 1,447 194.8 49.6 9.0 8.7 -2.1 25.8 1.7 6.7 3.2 6.4 0.0 0.0 3.3 812
PENN US Penn National N 16.11 16.00 -1% 1,284 34.1 21.2 8.2 7.3 10.0 11.1 7.5 11.1 -15.0 0.2 0.0 0.0 2.3 190
ISLE US Isle of Capri OP 14.94 15.00 0% 598 18.3 14.6 7.6 7.3 8.6 20.6 68.6 48.9 12.0 13.0 0.0 0.0 30.7 5140
MCRI US Monarch Casino OP 18.61 23.00 24% 313 17.0 17.2 6.9 6.7 9.1 25.5 10.2 9.3 -5.2 -39.0 0.0 0.0 1.8 14
Average 25.8 18.5 9.2 8.5 5.0 24.4 29.8 25.1 -4.8 -3.3 0.9 0.8 3.8 1266
OP: Outperform, N: Neutral, UP: Underperform, NR: Not rated.
Source: Bloomberg, Macquarie Research, January 2015. Price date: April 29, 2015.

30 April 2015 7
Macau has been the biggest outperformer and underperformer
Asia gaming share price performance varies across the six key markets: Macau, Philippines,
Korea, Australia, Singapore and Malaysia.
Over a five-year period, Macau gaming stocks in our coverage have been the best performers,
with a cumulative return of 383% since Jan 2010, closely followed by Philippines with 330%
return. However, the downturn since 2014 has equally been punishing for Macau investors,
down 43% since the start of 2014. On the other hand, Australian gaming stocks were the
second-worst performers, but that’s largely due to Crown’s stake in Macau operator MPEL.
Fig 7 Asia gaming share price performance since 2010
The above EV/EBITDA lines are composites of Macau: 1928.HK, 27.HK, 1128.HK, 880.HK, 2282.HK,
MPEL.US; Philippine: BEL.PM, BLOOM,PM, MCP.PM, PLC.PM, RWM.PM; Korea: 034230.KS, 114090.KS;
Australia: CWN.AU, EGP.AU; Singapore: GENS.SP; Malaysia: GENM.MK
Source: Bloomberg, Macquarie Research, April 2015
On forward EV/EBITDA basis, Macau remains the most expensive, trading at an average 12-
month forward EV/EBITDA of 14.5x on (Sands and Galaxy are the most expensive at 16-17x).
Macau stocks have re-rated from high-single digit EBITDA to all-time peak of 20x in early
2014 when GGR peaked.
Asia ex-Macau gaming stocks are generally cheaper on 6-12x EV/EBITDA and have stayed
consistently in that range, with the exception of GENM, which has derated from high-teens to
a high-single-digit rate over the past five years.
Fig 8 Macau remains the most expensive, Philippines and Malaysia attractive
0
200
400
600
800
1,000
1,200
2010 2011 2012 2013 2014 2015
Macau Philippine Korea Australia Singapore Malaysia
Share price performance in USD terms (Jan 2010 =100)
0
5
10
15
20
25
2010 2011 2012 2013 2014 2015
Macau Philippine Korea Australia Singapore Malaysia
Forward EV/EBITDA(x)
Macau remains the
most expensive
regional market at
14.5x forward
EV/EBITDA

30 April 2015 8
Fig 9 Macau forward EV/EBITDA Fig 10 Philippines forward EV/EBITDA
Composite of: 1928.HK, 27.HK, 1128.HK, 880.HK, 2282.HK, MPEL.US Composite of: BEL.PM, BLOOM,PM, MCP.PM, PLC.PM, RWM.PM
Source: Bloomberg, Macquarie Research, April 2015 Source: Bloomberg, Macquarie Research, April 2015
Fig 11 Korea forward EV/EBITDA Fig 12 Australia forward EV/EBITDA
Fig 13 Singapore forward EV/EBITDA Fig 14 Malaysia forward EV/EBITDA
0
5
10
15
20
25
2008 2009 2010 2011 2012 2013 2014 2015
Forward EV/EBITDA (x)
Avg = 10.0x
0
2
4
6
8
10
12
14
16
18
20
2008 2009 2010 2011 2012 2013 2014 2015
Avg = 9.2x
0
5
10
15
20
25
30
35
2008 2009 2010 2011 2012 2013 2014 2015
Paradise GKL AVG
Avg = 8.6x
0
2
4
6
8
10
12
2011 2012 2013 2014
CWN AU EGP AU AVG
Avg = 8.0x
0
2
4
6
8
10
12
14
16
18
2011 2012 2013 2014
GENS SP AVG
Avg = 11.9x
0
2
4
6
8
10
12
2008 2009 2010 2011 2012 2013 2014 2015
GENM MK AVG
Avg = 7.2x

30 April 2015 9
Cost structure varies across Asia, yielding profitability differentials
Dealers’ wages are highest in Australia and Korea and the lowest in the Philippines, although
Macau is the notable exception with acute labour shortage due to legacy local labour law
driving structural wage inflation.
Gaming taxes are the highest in Macau (39% of GGR) where as Naga in Cambodia pays the
least, at around 1% of GGR. Macau is corporate-tax-free.
Based on Macquarie FY16 forecasts, Philippines and Singapore casinos will generate the
highest EBITDA margins at close to 40%, whereas Macau will have just 22% due to the
inferior cost structure. However, on an ROE basis, given Macau’s high dollar return on initial
investments, it will likely continue to command highest ROE across the region at 25%.
Fig 15 Dealer wages lowest in Philippines Fig 16 Macau has the highest gaming tax regionally
Source: Innovation Group, Macquarie Research, April 2015 Source: Innovation Group, Macquarie Research, April 2015
Fig 17 Philippines has the highest EBITDA margin,
thanks to its low cost structure Fig 18 Macau, Korea lead with the highest ROE
*Excluding Premium Leisure, due to the special profit arrangement with Melco Crown Philippines
Source: Macquarie Research, April 2015 Source: Macquarie Research, April 2015
0
500
1000
1500
2000
2500
3000
3500
4000
Macau Singapore Australia Philippines Malaysia Korea
Entry-level dealer wages (US$/month)
0%
5%
10%
15%
20%
25%
30%
35%
40%
VIP Mass Corporate
21%
41%
26%
25%
38%
27%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Macau Philippines* Korea Australia Singapore Malaysia
FY16EEBITDAmargin
21%
18%
21%
10%
7%
9%
0%
5%
10%
15%
20%
25%
Macau Philippines* Korea Australia Singapore Malaysia
FY16E ROE

30 April 2015 10
Investors will also increasingly take concession renewal overhang into valuation consideration
given that the earliest operators in Macau will renew their licences in less than five years. This
is unique to Macau operators where the rest of the region is not exposed to such imminent
uncertainty.
Fig 19 Macau is the notable exception with current concession regime coming due within the next 5 years
Macau Singapore Australia Philippines Malaysia Korea Cambodia
Regulation
Agency
Gaming
Inspection and
Coordination
Bureau (DICJ)
Casino Regulatory
Authority
State
governments
Philippine
Amusement And
Gaming
Corporation
Ministry of
Finance
Ministry of
Culture,
Sports,
Tourism
Ministry of
Economy and
Finance
Concession
period
20 years 30 years NA 25 years NA Infinite 70 years (Naga)
Concession
expire
2020 (SJM,
MGM)
2022 (Sands,
Galaxy, Melco
Crown, Wynn)
2036 NA 2033 Renewed every
3 months
NA 2065 (Naga)
Locals
allowed?
Allowed Locals are levied
S$100 entry fee,
casino marketing to
locals prohibited
Allowed Allowed Allowed except
for local Muslims
Only
Kangwon
Land allows
Not encouraged
Potential policy
changes
Restricting
Chinese
visitation
End of exclusivity
provision in 2017
could mean a third
license to be
issued
No change There is always
a risk that the
government
could introduce
another casino
license
Loosening on
foreigner-only
casinos
Increase in
gaming tax after
2018, could
introduce new
licenses

30 April 2015 11
Race to build Integrated Resorts
Macau, Singapore currently dominate Asian IR landscape
Integrated Resorts (IRs) are mega casino, entertainment, hospitality complexes offering
ample amenities and activities for leisure-seeking customers in addition to having large
enough capacity to host major conventions and conferences. The business model was first
introduced on the Vegas Strip in 1989, when Steve Wynn built the Mirage.
Although there is no official definition of IR, the idea of a combination of gaming, lodging,
entertaining and shopping functions under one roof is widely recognized. According to the
article of Andrew MacDonald and William R Eadington, “Integrated Resort developments at
the present time might cost US$4 billion or more, and include facilities and amenities that
create virtual ‘cities of entertainment’.” Considering the construction cost difference and
exchange issue, we think the investment level of IRs would be lower than US and Europe, but
the non-gaming facilities will be necessary. Thus, we classify those with US$1bn investment
or more as IRs, and those below such level as sub-IRs.
IR is getting considerable attention in Asian gaming industry, particularly over the past
decade. Asia gaming operators realized gradually that the volume of mass clients is more
critical to their business, especially when the biggest bottleneck in gaming is the lack of
rooms for players. Identifying IR development is critical in understanding the supply side of
the gaming equation, because IRs are attractive gaming properties that drive local and
foreign inbound traffic.
We summarize existing IRs across Asia in the table below. Out of the 16 across the regions,
eight are located in Macau and Singapore. A total of US$37bn has been deployed so far on
these IRs, while total room count in those properties totalling close to 38k rooms.
Fig 20 Asian Integrated Resorts currently operational
Property Company Regions
Initial
opening
year
Capex (US$
mn inflation
not adjusted) Tables Slots Rooms
Retail GFA
(sqm)
Resorts World Highland GENM Malaysia 1980 5,000 426 3,140 10,343 NA
Naga World Naga Cambodia 1995 344 169 1,543 700 13,248
Crown Melbourne Crown Resorts Melbourne, Australia 1997 2,000 350 2,500 1,627 3,000
The Star Echo Entertainment Sydney, Australia 1997 1,500 260 1,500 732 5,500
Wynn Macau Wynn Macau 2006 1,060 500 375 1,014 2,400
Venetian Sands Macau 2007 3,850 800 3,400 2,905 93,548
MGM Macau MGM Macau 2007 722 420 1,270 582 3,800
CoD MPEL Macau 2009 2,100 450 1,514 1,400 16,000
Resorts World Manila RWM Philippines 2009 500 296 1,868 1,082 11,534
Resorts World Sentosa GENS Singapore 2010 6,590 530 1,300 1,500 30,000
Marina Bay Sands LVS Singapore 2010 5,700 611 2,455 2,561 74,322
Galaxy Phase I GEG Macau 2011 2,129 450 1,500 2,260 35,000
Sands Cotai Central Sands Macau 2012 4,400 460 2,200 5,700 28,000
Solaire Manila BLOOM Philippines 2013 1,200 361 1,623 800 60,000
Grand Ho Tram Phase I Asia Coast
Development
Vietnam 2013 500 90 600 541 13,600
CoD Manila MCP/PLC Philippines 2014 832 188 1,508 950 20,000
Subtotal:
Macau 14,261 3,080 10,259 13,861 178,748
Singapore 10,990 990 3,500 7,200 58,000
Malaysia 5,000 426 3,140 10,343 NA
Philippines 2,532 845 4,999 2,832 91,534
Australia 3,500 610 4,000 2,359 8,500
Cambodia 344 169 1,543 700 13,248
Vietnam 500 90 600 541 13,600
Regional total 36,627 6,120 27,441 37,295 350,030
Source: Company data, various channel checks, Macquarie Research, April 2015
Think Vegas
Integrated Resorts
are complexes
where you can eat,
drink, sleep, gamble
and be entertained
all under one roof

30 April 2015 12
Macau, Korea and Philippines leading a US$50bn pipelines
Significant supply will be coming on line over the next five years across Asia. Below table
summarizes confirmed projects in each individual market. A combined US$50bn will be spent
across the region to more than double current hotel capacity from just over 30k rooms to 64k
rooms.
More than half of the US$50bn capex will be spent in Macau. Of course, projects can be
delayed and scaled back but thus far most are firmly committed even those in Macau that are
facing severe headwind with GGR falling sharply from peak in 2014.
Fig 21 Regional IR development pipeline through 2020
Project Company Regions
Opening
year
Capex (US$
mn) Tables Slots Rooms
Retail GFA
(sq m)
Galaxy Phase II Galaxy Macau 2015 2,500 500 1,000 1,350 14,008
Studio City MPEL Macau 2015 2,450 800 1,500 2,000 2,681
Lot 9 Summit Ascent Vladivostok 2015 182 80 800 119 TBD
The Parisian & St. Regis Sands Macau 2016 3,050 400 2,200 3,300 4,315
Wynn Palace Wynn Macau 2016 4,000 500 1,500 1,700 1,000
MGM Cotai MGM Macau 2016 2,800 500 2,500 1,600 1,610
Resorts World Manila
expansion
RWM Philippines 2016 1,226
Manila Bay Resorts Tiger Resort Philippines 2016 2,000 500 3,000 2,000 TBD
Highland expansion GENM Malaysia 2016 1,250 2,300
Naga2 Naga Cambodia 2016 369 300 500 1,300 18,581
Grand Ho Tram Strip
Phase II
Asia Coast
Development
Vietnam 2016 500 90 1,400 559 TBD
Palace Lisboa SJM Macau 2017 3,500 700 1,000 2,000 6,574
Paradise City Phase 1+2 Paradise/Sega
Sammy
Korea Incheon 2017 900 160 350 814 TBD
South Hoi An Integrated
Casino Resort
Vina Capital Vietnam 2017 4,000 90 600 500 TBD
Galaxy Phase III & IV Galaxy Macau 2018 9,032 TBD TBD 3,000 TBD
Resort World Bayshore RWM Philippines 2018 1,100 221 1,323 1,440 1,750
Resort World Jeju GENS/Landing Korea Jeju 2018 1,000 240 500 2,800 TBD
Lippo-Caesars Caesars/Lippo/OUE Korea Incheon 2018 800 130 400 560 TBD
Mohegan Sun Mohegan Sun Korea Incheon 2018 1,600 250 1,500 1,000 TBD
Lot 10 Summit Ascent Vladivostok 2018 500 170 500 500 TBD
NagaWorld Naga Vladivostok 2018 350 100 1,000 1,000 TBD
Saipan casino Imperial Pacific Saipan 2018 2,000 TBD TBD 2,004 TBD
Queens Wharf Brisbane Licence Pending
(Echo or Crown)
Queensland,
Australia
2019 TBD TBD TBD TBD TBD
Aquis Great Barrier Reef Aquis Entertainment Queensland,
Australia
2022 6,100 TBD TBD TBD TBD
Subtotal:
Macau 27,332 14,950
Philippines 3,100 4,666
Korea 4,300 5,174
Malaysia 1,250 2,300
Australia 6,100
Cambodia 369 1,300
Vietnam 4,500 1,059
Vladivostok 1,032 1,619
Saipan 2,000 2,004
Regional total 49,983 33,072
Source: Company data, various channel checks, Macquarie Research, April 2015

30 April 2015 13
Supply drives visitation, and hopefully GGR
We measure supply growth by hotel room count, which is a close proxy for visitation capacity.
Growth figures are staggering across the region: total room count will more than double by
the end of the decade. Macau is firmly leading this with Cotai developments.
Fig 22 Total room count will double across Asia IRs through 2020
Source: Company data, Macquarie Research, April 2015
Fig 23 Total 30,636 rooms operated by IRs currently,
45% are located in Macau
Fig 24 By 2020, there will be 64,000 rooms operated
by IRs. Macau will remain with 45% rooms share but
notable growth will come from Philippines and Korea
Source: Company data, Macquarie Research, April 2015 Source: Company data, Macquarie Research, April 2015
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Currentlyunder operation Planned additions
# of rooms operated in Integrated Resorts
Macau
45%
Philippines
9%
Malaysia
34%
Australia
8%
Cambodia
2%
Vietnam
2%
Macau
45%
Philippines
12%
Korea
8%
Malaysia
20%
Australia
4%
Cambodia
3%
Vietnam
2%
Vladivostok
3%
Saipan
3%
~US$50bn will be
spent in Asia
through the end of
the decade to more
than double current
capacity

30 April 2015 14
Gaming industry’s two biggest growth constraints are hotel rooms and infrastructure. Macau
is a perfect illustration of these two supply side bottlenecks.
We are witnessing infrastructure improvements across Asia to expand airports and ground
infrastructure which will ultimately benefit tourism and gaming industries and increase
appeals to consumers. Completion of these projects should further catalyse visitations to IR
cluster destinations and hopefully translate proportionally into GGR.
Fig 25 Major Asia gaming markets’ capacity snapshot
Macau Korea Philippines Cambodia Vietnam Australia
Total hotel
rooms
2014 27,800 88,958 2,972 7,350 40,900 229,646
2020 49,500 n/a 6,412 11,000 74,000 255,000
Casino
operated
rooms
2014 16,600 924 6208 ~1,000 4381
2020 37,600 3,424 9137 5431
Airport
handling
capacity
Pax per
year
~5m c.75m (Incheon
44m, Jeju 27mn,
etc)
10m 7.5m 77.08m available
seats per year
Transportatio
n upgrade
Airport Macau Air port
expansion
Incheon and Jeju
expansions to
come
Terminal 1
renovation
2 airports
(Phnom Penh
and Siem
Reap)
3 airports (Cam
Ranh, Long
Thanh, Van
Don)
Road Hong Kong-Macau
bridge to link Macau to
HK Int'l Airport (50m
annual capacity)
Skyway-NAIA
connector road
National Road
1-5 extension
Rail LRT development LRT extension Highway
improvements
7 major
metro/rail
systems update
Port/Dock Ferry dock upgrade Jeju port
expansions
Investment (US$ mn) Airport US$ 0.63bn;
LRT US$ 1.8bn
NAIA
expressway -
US$400m
Airport US$
1bn; Road
US$ 6,000mn
Airport US$
8.2bn; Rail US$
3.2bn
Estimate finish time Airport 2016; LRT
2018
2016 Airport 2016;
Road 2018
Airport 2025;
Rail 2015
Traffic improving effect Airport 4mn till 2016 Improvement of
access towards
Entertainment
City
Airport 5mn till
2016
Airport 16mn till
2025;
Source: CEIC, Macquarie Research, April 2015

30 April 2015 15
Concerned about regional competition? Stick with Philippines and
Malaysia for local demand strength
With so much capacity coming on line, a logical concern would be on competition across the
region. Of course, a bullish argument would be the low penetration of gaming across Asia still
when compared to Australia or Japan (Pachinko market).
Fig 26 Asian gaming penetration remains low compared to developed countries
We too share concerns about the total demand available to meet the significant supply
increase. We prefer markets where casinos drive most of their business from locals
(Philippines and Malaysia) for the same reason that Sheldon Adelson and Steve Wynn have
yet to enter some Asian markets: local demand is preferred to foreign only due to resilience in
the long term and because it eliminates international policy risks.
Fig 27 We prefer local-demand-driven markets
Markets Locals allowed?
Macau Allowed, the only place where gambling is legal within Greater China
Singapore Locals are levied S$100 entry fee, casino marketing to locals prohibited
Australia Allowed
Philippines Allowed
Malaysia Allowed except for local Muslims
Korea Not allowed, except for Kangwon Land
Cambodia Not encouraged, locals are sometimes checked
Vietnam Not allowed
Vladivostok Not allowed
Source: Macquarie Research, April 2015
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
GGR as % of GDP
We prefer markets
with strong local
demand and
Philippines is our
regionally preferred
market

30 April 2015 16
Fig 28 Current Asia IR landscape
Fig 29 Would look drastically different in five years’
time and could increase competition
Cash rebates to mass players: a long term competitive risk
Through our channel checks thus far, we find that only SJM provides cash rebates up to 1.0%
of rolling chip volumes to its premium mass customers to attract players from other properties.
Most operators use various types of soft comps (free rooms, airfares, F&B vouchers) to
compete for high rollers on the mass floor.
As the next phases of developments on Cotai (all are major IRs) will essentially double
capacity, we cannot rule out competition intensifying while Macau GGR continues to soften as
regional destinations ramp up their appeal to Chinese players. Macau operators will have no
choice but to accept lower EBITDA margin on the premium mass business by introducing
cash rebates to players.
Under that scenario, margin pressure could eventually spread to regional gaming markets
that rely heavily on inbound players who are looking for an alternative destination to Macau.
For this reason, we strongly prefer regional gaming markets with high exposure to local
demand.
Fig 30 Cash rebates to mass customers could destroy margins
As of Dec 2014 Macau Singapore Australia Philippines Malaysia Korea Cambodia
VIP junket commission Capped at
1.25% of
rolling chips
Junkets not
allowed
1.4-1.8% of
rolling, or
~50% of
GGR
1.5% of
rolling chips
or c.20% of
GGR
GENM does
not disclose,
but higher
than Macau.
Players
travelling
from afar
receive
higher
percentage
1.5-2.0% of
rolling chips
1.7% of rolling
Mass customer cash rebate Up to 1% of
rolling (SJM
only)
No No No No Some
receive
point rebate
No
Casinos extending credit to players? Negligible,
gambling
debt cannot
be legally
enforced in
China
Yes, GENS
has been
more
aggressive
than MBS
Yes, though
with tight
limits
Yes No Yes Yes
Source: Channel checks, Macquarie Research, April 2015
Domestic Gaming Legal
Domestic Gaming Illegal
: IRs: 5
Dwarf-IRs: 1
Tables: 2,580
Slots: 9,884
Macau
Dwarf-IRs: 3
Tables: 2,440*
Slots: 3,123
Philippines
IRs: 1
Table: 426
Slot: 3,140
Malaysia
IRs: 2
Table: 1,140
Slot: 3,750
Singapore
Cambodia
Vietnam
Dwarf-IRs: 1
Table: 169
Slot: 1,543
IRs: 1
Tables: 90
Slots: 600
Domestic Gaming Legal
Domestic Gaming Illegal
: IRs: 11
Dwarf-IRs: 1
Tables: 6,480
Slots: 19,960
Macau
IRs: 3
Dwarf-IRs: 3
Tables: 4,940 *
Slots: 6,532
Philippines
IRs: 1
Table: 426
Slot: 3,140
Malaysia
IRs: 2
Table: 1,140
Slot: 3,750
Singapore
Cambodia
Vietnam
Dwarf-IRs: 2
Table: 469
Slot: 2,043
IRs: 2
Dwarf-IRs: 1
Tables: 270
Slots: 2,600
Korea
: IRs: 1
Dwarf-IRs: 2
Tables: 500
Slots: 1,300
Vladivostok
Dwarf-IRs: 3
Table: 350
Slot: 2,30
Domestic Gaming Limited
Watch out for cash
rebates as
competition
intensifies in Macau

30 April 2015 17
Following in the footsteps of the Chinese
Asia GGR pie at US$62bn in 2014E, to decline by 15% in 2015E
We estimate Asia’s total GGR pie at US$62bn in 2014. Macau remained the dominant
destination with 72% share followed by Singapore at a distant second with 10% share. We
forecast the overall market to shrink by 15% in 2015, driven by a 24% decline in Macau while
the rest of the region continues to grow.
Over the next three years through FY17E, we see the highest growth potential in the
Philippines and Korea at 19% and17% GGR CAGR through 2017, respectively. Both
countries have large integrated resort expansion pipelines although the Philippines potential
will be largely driven by strength of its domestic mass market whereas in Korea, reliance on
inbound traffic particularly from China will continue to drive the foreign-only market.
Fig 31 Asia GGR pie to shrink by 15% in 2015 due to a
24% pullback in Macau
Fig 32 Philippines and Korea offer biggest growth
potential while Macau continues to be the drag
With Macau’s VIP segment in structural decline, we expect mass market gaming’s
contribution to Asia’s total GGR to rise further from 32% in 2011 and 41% in 2014 to 56% by
2017E.
Fig 33 Mass market to drive growth going forward Fig 34 Macau in decline but should still dominate
0
10
20
30
40
50
60
70
2011 2012 2013 2014 2015E 2016E 2017E
Macau Philippines Korea Singapore Malaysia Cambodia Australia
GGR (US$bn)
9% 9%
0%
6%
27%
-1%
15%
-1%
-5%
0%
9%
19%
5%
17%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
2011-2014 2014-2017E
3-yr GGR CAGR
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2011 2012 2013 2014 2015E 2016E 2017E
VIP Mass Total GGR YoY
US$ mn
69.9% 71.2% 73.1% 71.7%
63.4% 63.3% 63.0%
2.8% 3.1% 3.5% 4.6%
6.4% 7.4% 7.6%
2.0% 2.2% 2.2% 2.3%
3.1% 3.3% 3.9%
12.5% 10.6% 9.6% 9.7%
11.4% 10.7% 10.2%
8.0% 7.9% 7.1% 7.4% 10.2% 9.7% 9.5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014 2015E 2016E 2017E
Macau Philippines Korea Singapore
Malaysia Cambodia Australia

30 April 2015 18
Are Chinese gamblers avoiding Macau and going elsewhere?
While the negative atmosphere in Macau (anti-corruption, surveillance, diversification,
UnionPay, smoking ban, to name a few) is likely driving Chinese players elsewhere, it is far
from enough to explain our expected 24% YoY decline in Macau GGR in 2015. Australian
gaming operators were reporting VIP volume growth of 70-90% YoY in recent quarters while
Naga saw VIP GGR doubling in 1Q15.
Our regional gaming team surveyed operators across the Asia-Pacific region. Based on
guidance and observations on percentage of GGR contribution from Chinese players, we
construct an estimate of the total Chinese GGR pie.
Fig 35 Chinese will continue to dominate Asia GGR
Fig 36 GGR exposure to Chinese varies across the
regions
Only 7% of Macau’s GGR decline has gone to other regions
Evidently, the growth of Chinese GGR in other regions, namely Australia (+50% in FY15),
Cambodia (+61%) and Korea (+18%), totalling up to ~US$750m in dollars this year, is just a
fraction of Macau’s expected drop in GGR of US$10bn this year.
Chinese GGR decline is structural in nature in our view, driven by a shift in China’s economic
model, that was once FAI-driven and easy credit fuelled and is no longer sustainable, hence
the high roller gamblers can no longer afford to bet big on Baccarat tables in VIP rooms and
on Premium mass floors in Macau. For more, please read our note Tuhao-nomics.
Fig 37 Total Chinese GGR down 21%; growth in non-
Macau Asia only a fraction of Macau’s $10bn decline!
Fig 38 Australia is seeing the biggest uptick from
outbound Chinese gamblers
35
39
47 46
36 38 41
13
14
15 16
16
18
19
0
10
20
30
40
50
60
70
2011 2012 2013 2014 2015E 2016E 2017E
Total Chinese Non-Chinese
GGR (US$bn)
75%
94%
27%
56%
32%
5%
12%
19%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Estimated % GGR from Chinese, FY14
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
0
5
10
15
20
25
30
35
40
45
50
2011 2012 2013 2014 2015E 2016E 2017E
Macau Non-Macau YoY total Chinese
GGR from Chinese (US$bn) YoY change in Chinese GGR
0
1
2
3
4
5
6
7
2012 2013 2014 2015E 2016E 2017E
Philippines Korea Singapore Malaysia Cambodia Australia
Outbound Chinese GGR (Asia-ex Macau) in US$bn

30 April 2015 19
Outbound gaming is structural: Korea, Australia and Cambodia
Although the total Chinese GGR pie may be in structural decline and greatly hurting markets
such as Macau and Singapore, there are other markets benefiting from the diversion of
Chinese gamblers. That only 7% of Macau’s GGR decline has gone to regional markets
means there could be significant upside going forward.
Key beneficiaries of outbound Chinese gaming are Korea, Australia and Cambodia. The table
below summarizes the expected dollar amount of Chinese GGR. These markets are coming
off very low bases (compared with Macau’s) and the growth potential appears encouraging.
Fig 39 Australia, Korea and Cambodia seeing the most uptick from Chinese
gambling moving to other regions
GGR in US$m 2011 2012 2013 2014 2015E 2016E 2017E
Total Chinese GGR 34,937 39,423 46,721 45,824 36,295 38,495 40,606
Macau 31,634 35,818 42,573 41,297 30,997 32,757 34,244
Philippines 264 360 510 731 818 950 1,183
Korea 348 552 693 800 940 1,093 1,323
Singapore 1,979 1,824 1,956 1,907 1,917 1,926 1,936
Malaysia 77 78 81 75 73 80 86
Cambodia 64 76 102 162 261 343 444
Australia 571 715 806 851 1,289 1,346 1,390
Change in GGR
Macau 4,184 6,755 -1,276 -10,300 1,760 1,487
Philippines 96 150 221 87 132 233
Korea 204 142 107 141 153 230
Singapore -155 132 -49 10 10 10
Malaysia 1 3 -6 -2 7 6
Cambodia 12 26 61 99 82 101
Australia 144 92 45 438 57 45
Net change 4,486 7,298 -897 -9,529 2,200 2,111
There are several reasons Chinese gamblers are increasingly heading to other regions.
 Negative atmosphere in Macau and Hong Kong discouraging Mainland visitors
 Visa policies easing in other countries
 Currency depreciation effect (Australia, Japan, Europe)
 Increasing access to direct flights and cultural influence (Korea)
 Lower minimum bets and qualification for VIPs
 Junket incentives: lower gaming tax and higher commissions than Macau
Fig 40 HK/Macau remain the key ‘outbound’ tourist
destinations
Fig 41 But growth going forward will likely be to other
destinations nearby, such as Korea
Source: CNTA, Macquarie Research, April 2015 Source: KTO, Macquarie Research, April 2015
0
5
10
15
20
25
30
35
40
45
Million person (2014)
-20
0
20
40
60
0
5
10
15
20
25
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15E 16E 17E
% YoYVisitor (mn) Others
Japanese
Chinese
Chinese growth (RHS)
Chinese are
travelling abroad
more than ever
before, gaming is
one of the key
activities

30 April 2015 20
Hong Kong unwelcoming to Mainland Chinese, Macau overly
congested and has policy restrictions
A series of political events, from Occupy Central (4Q14) to more recent hostility against
Mainland tourists as a result of anger towards parallel traders has dampened Chinese tourism
to Hong Kong. According to local media, Hong Kong’s mainland Chinese visitations have
been declining at double-digit rates YoY since March 2015.
Meanwhile the negative atmosphere in Macau, be it a crackdown on corruption, surveillance
of fund flows, UnionPay restrictions, or a smoking ban, has been made worse by border and
infrastructure congestion. Macau simply cannot handle any more tourists before the
completion of the Macau-Zhuhai-Hong Kong Bridge and the Hengqin High Speed Rail in 2018;
hence the government is proposing an annual cap on mainland visitation at 21m.
Our concern is that anti-mainland sentiment in Hong Kong will drag Macau visitation down in
the long run since Hong Kong and Macau are under a single Individual Visit Scheme (IVS)
and non-Guangdong Mainlanders who need to fly into HK or Macau view the two special
administrative regions as a packaged destination (i.e. leisure travellers come to visit both
cities in a single trip).
Meanwhile, visa restrictions have been relaxed almost everywhere
else in Asia and they are welcoming the Chinese with open arms
Chinese passports have become more valuable in recent years with many foreign countries
relaxing visa restrictions in order to bring in lucrative Chinese tourism dollars.
Fig 42 Nations providing favourable visa policies to China tourists
Policy Nations (Regions)
Mutual visa free San Marino, Seychelles, Mauritius, Bahamas
Unilateral visa free to Chinese Samoa, Haiti, Jamaica, Dominica, Antigua and Barbuda, Jeju Island Korea,
Saipan, the British Turks and Caicos Islands, British South Georgia and the
South Sandwich Islands
Landing visa available to
Chinese
Maldives, Indonesia, Brunei, Fiji, Comoros, Palau, Burma, East Timor,
Bahrain, Jordan, United Arab Emirates, Laos, Lebanon, Nepal, Sri Lanka,
Thailand, Turkmenistan, Iran, Vietnam, Egypt, Togo, Verde angle, Guinea-
Bissau, Ivory Coast, Madagascar, Malawi, Sierra Leone, Tanzania, Uganda,
Guyana, British St. Helena, Tuvalu, Vanuatu, Cambodia, Kenya,
Bangladesh, Mauritania
Source: CNTA, Macquarie Research, April 2015
Fig 43 Visa policies of major Asian destinations
Nations
(Regions)
Favourable policies Negative factors
HK Individual Visit Scheme (IVS) Anti-China sentiment
Macau Individual Visit Scheme (IVS) Infrastructure bottlenecks, lack of
rooms, policy negatives
Singapore 96-hr landing visa
3-5 days to approve the applications from Beijing,
Shanghai, Chengdu, Guangzhou and Xiamen
5-7 days to approve the applications from rest of China
Malaysia No visa application fee Airline incidents
7 days landing visa
120-hr transit visa
Philippines Allowed no-visa entry for 7 days, if the visitors have US,
Japan, Canada or EU visas
Maritime disputes with China
Vietnam Landing visa Maritime disputes with China
More complicated than other nations
Cambodia Free landing visa
Australia WH visa
Investment visa
Korea Allowed no-visa entry
Eased qualifications and extended the validity of multiple-
entry visa
Further Eased qualifications of multiple-entry visa
Source: Various government tourism boards, Macquarie Research, April 2015
Hong Kong, Macau
historically
accounted for
majority of Chinese
outbound tourism
Visa policies
towards Mainland
Chinese are being
relaxed in many
popular tourist
destinations

30 April 2015 21
Fig 44 While Macau visitation will become ever more restrictive
Date Details
July 2003 to now Opening IVS visa to mainland China tourists
Before Apr 2007 Transit visa application frequency is twice per month and staying for 30 days
May 2007 to Jul 2008 Transit visa application frequency is once per month and staying for 14 days
Mar 2010 to now Transit visa application frequency is once every two months and staying for 7 days
July 2014 to now Transit visa staying permit for 5 days
April 2015 Proposed a 21m Mainland Chinese visitation cap

30 April 2015 22
Macau junkets are taking best customers elsewhere
Through our various channel checks across the region, we find that junkets and players are
being lured to non-Macau casinos through monetary incentives.
Minimum bets in Macau are notoriously known as the world’s highest by a large margin. By
contrast, Asian regional markets’ table games are much more affordable. The bar to qualify
as a VIP player in other regions is also much lower than Macau’s.
Fig 45 Current minimum bet is much lower in other
markets compared with Macau, attracting mass players
Fig 46 And it’s much easier to qualify as VIP
elsewhere
More importantly though in our view, junket-driven VIP is of much greater importance when it
comes to Chinese outbound GGR contribution. Junkets are incentivised in a big way when
they get up to 2% commission on rolling chips versus the 1.25% in Macau. Macau’s high
gaming taxes are preventing operators from paying any higher to junkets (VIP EBITDA
margin is only 10% for the casino operators) but the other regions with much lower gaming
taxes can afford to pay up.
Of course, long travel distances, and difficulties in fund transfer are also discouraging junkets
from going farther away from Macau but many regional operators have their own private jets
to shuttle junkets’ high-end VIP players directly from lower-tier cities in China.
Fig 47 Gaming taxes are much lower vs. Macau Fig 48 Junkets’ commission rates are much higher
Source: Various gaming regulators, company data, Macquarie Research,
April 2015 Source: Company data, Macquarie Research, April 2015
0
10
20
30
40
50
60
70
Minimum bet (US$, table Baccarat)
0%
5%
10%
15%
20%
25%
30%
35%
40%
VIP Mass Corporate
1.3%
1.8%
1.5%
2.0% 2.0%
1.5%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
2.2%
Junket commission as % of VIProlling
junkets
not
allowed
does
not
disclose
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Min chip buy-in to qualify as VIP (US$)
Junkets are lured by
higher commissions
in jurisdictions
other than Macau

30 April 2015 23
Regional markets in detail
In the remaining part of the report we present regional market overviews from our local analysts.
Markets are sequenced in descending order of 2014 GGR in US dollar terms.
Note that although Japan is excluded from the chart below due to the lack of ‘proper casino’
operations, its Pachinko market is sizable at US$23.6bn in 2014 (vs. Macau’s GGR at $43bn).
The potential for a legalization and adoption of the integrated resort model in Japan could be
disruptive to the regional competitive landscape.
Fig 49 Asia gaming market size by 2014 GGR
Fig 50 Dealer wages lowest in Philippines Fig 51 Tax rate lowest in Cambodia
Source: Innovation Group, Macquarie Research, April 2015 Source: Innovation Group, Macquarie Research, April 2015
43.9
23.6
5.9 4.5
2.7 1.5 1.4 1.3 0.3
0
5
10
15
20
25
30
35
40
45
50
Macau Japan
(pachinko)
Singapore Australia Philippines Malaysia Korea Cambodia Vietnam
GGR (US$bn)
0
500
1000
1500
2000
2500
3000
3500
4000
Macau Singapore Australia Philippines Malaysia Korea
Entry-level dealer wages (US$/month)
0%
5%
10%
15%
20%
25%
30%
35%
40%
VIP Mass Corporate
Japan gaming
would be a US$24bn
market if Pachinko
is included

30 April 2015 24
Macau
We have a cautious view on the Macau gaming sector, as the double whammy impact from weak
GGR and sharp increase in costs and capex from new capacity addition will bite into earnings and
FCF, making current dividend yields unsustainable. The whole sector is still expensive, with
16/14x FY 15/16E EV/EBITDA compared to the avg 9/8x global peers’ level.
The tightening of shadow bank lending in China largely constrained the liquidity situation in the
real economy and specifically those of the SMEs, whose bosses are the ultimate source of VIP
and premium mass players. Meanwhile, the key question investors and operators appear to be
asking is whether the capacity addition over the next 3 years will sequentially grow the demand
pie or operators will need to compete more fiercely for market share. Recent trends of still robust
visitation versus a falling GGR even on the mass side is concerning; we worry that as new casinos
open, operators will need to fill new capacity with less premium customers.
We have a Neutral rating for SJM (880 HK, TP HK$ 11.3), Melco Crown (MPEL US, TP
US$ 22.20) and MGM China (2282 HK, TP HK$ 17.0). We maintain Underperform ratings on
Sands China (1928 HK, TP HK$ 21.0), Galaxy (27 HK, TP HK$ 26.4) and Wynn Macau (1128 HK,
TP HK$ 14.8). Galaxy is on our Macquarie Marquee Sell List.
Valuation
Macau is currently trading on 14x FY15E EV/EBITDA and 15x FY16E EV/EBITDA, still above
the fair-cycle average of 12x and at a significant premium to the rest of the world at 8.0-8.4x
FY16E EV/EBITDA. We believe the market will become more cautious over Macau’s
valuation premium given structural headwinds and lack of visibility in GGR trends. Those with
an overly stretched balance sheet, long-dated capex plans, and hence cash flow/dividend
risks, will likely trade at a discount to their peers.
Our primary valuation methodology on the gaming sector is EV/EBITDA which we believe
appropriately captures cash earnings generation while neutralizing the impact of outsized
depreciation and capital structure differentials that would otherwise get reflected in a PER
methodology. We think the four-year average forward EV/EBITDA of 12.0x between May
2009 and June 2013 is a fair representation of a full-cycle valuation benchmark for the Macau
gaming sector.
Even looking at the consensus valuation below, Macau remains expensive, trading at 12x
forward EBITDA at the moment vs. a trough of 6.6x in 2009 and 8.7x in 2012. Earnings
downward revision and GGR decline have both been more punishing than the last two bear
cycles with the exception that consensus dividend yield is at all time high. That dividend yield
is now more than 100% of consensus FCF, which appears unsustainable as we head into
peak capex years when we expect FCF to turn negative.
Fig 52 Macau gaming comps table
Price TP ∆ Mkt Cap PER (x) EV/EBITDA (x)
EBITDA
CAGR (%)
EBITDA
margin FCF Yield (%) Div Yield (%)
Net
D/E
Ticker Company Rec lc lc % US$m CY15E CY16E CY15E CY16E FY14-16E CY15E CY15E CY16E CY15E CY16E FY14
1928 HK Sands China UP 32.0021.00 -34% 33,313 22.1 31.1 14.6 16.2 -19.8 30.7 -1.2 1.8 3.2 2.6 10
27 HK Galaxy UP 37.6526.40 -30% 20,670 28.4 35.3 17.3 17.2 -19.4 14.5 -5.2 -4.6 1.4 1.1 -24
1128 HK Wynn Macau UP 16.1414.80 -8% 10,820 27.7 21.6 16.5 12.4 -6.4 24.4 -7.9 -2.5 1.4 1.9 111
880 HK SJM N 9.9511.30 14% 7,262 12.7 15.5 6.0 6.5 -18.4 10.1 -7.7 -16.5 4.0 2.6 -92
MPEL US Melco Crown N 20.7522.20 7% 11,281 32.6 29.2 13.3 11.4 1.0 25.3 -4.5 6.9 0.9 1.0 46
2282 HK MGM China N 14.7217.00 15% 7,217 16.0 14.6 11.8 9.5 -6.1 24.6 -8.9 -10.9 2.2 2.4 -2
Average 20.8 21.9 14.4 14.1 -11.5 21.6 -4.4 -2.0 2.2 1.9 8
Source: Bloomberg, Macquarie Research, April 2015. Price date: April 29, 2015.
Jamie Zhou, CFA
jamie.zhou@macquarie.com
+852 3922 1147
Recent publications
Dec 2014: Sector initiation
Jan 2015: Warning! Margin and
yield may be lower than they
appear
Mar 2015: You build it, Tuhaos
may not come
Apr 2015: Tuhao-nomics under
a new normal
Macau is not cheap
at 14x EBITDA even
compared with its
own long term
average of 12x

30 April 2015 25
Fig 53 Macau remains expensive on 14x consensus EBITDA vs. 2012 bear cycle
of 10.6x
Source: Bloomberg, DICJ, Macquarie Research, April 2015
6.6
15.3
8.7
18.6
10.9
5
10
15
20
2009 2010 2011 2012 2013 2014 2015
+1 σ
Mean
-1 σ
Forward Consensus EV/EBITDA (x) Valuation
Average: 12.4x Average: 10.7x Average: 13.9x
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2009 2010 2011 2012 2013 2014 2015
2009 2010 2011 2012 2013 2014 2015 2016
Sector consensus EBITDA (US$m) Earnings revision
Upward earnings revision Downward
revision
Upward earnings revision
Downward
revision
-5.0%
-3.0%
-1.0%
1.0%
3.0%
5.0%
7.0%
9.0%
2009 2010 2011 2012 2013 2014 2015
FCF yield Div yield
% of combined market cap
falling FCF
but rising
div yield
rising yields falling yields
peaking yields
Yield

30 April 2015 26
GGR Forecast: VIP structural decline, Mass to grow slower than
capacity addition
We forecast continued softness in the market until late 2015; our GGR forecasts for
FY15/16/17E are -24% /+7%/+5%. We assume general liquidity conditions in China’s real
economy won’t meaningfully recover until further monetary easing through rate or RRR cuts
in 2015, while the government continues to tighten its grip on shadow bank financing to
reduce systemic risks to the banking system. SMEs as a result will only see very slow
recovery. We see VIP GGR continuing to decline by a mid-teens rate in 2015, as the still-tight
liquidity affects the super high rollers.
Fig 54 Base case GGR forecasts Fig 55 A modest recovery in Mass starting 3Q15
Source: DICJ, Macquarie Research, April 2015 Source: DICJ, Macquarie Research, April 2015
Fig 56 Base case GGR forecasts
US$m 2013 2014 2015E 2016E 2017E
Total GGR 45,087 43,934 33,182 35,498 37,325
YoY 19% -3% -24% 7% 5%
VIP 29,739 26,209 17,339 15,625 13,637
YoY 13% -12% -34% -10% -13%
Mass 13,510 15,882 14,377 18,034 21,691
YoY 35% 18% -9% 25% 20%
Slots 1,838 1,840 1,466 1,840 1,997
YoY 9% 0% -20% 25% 9%
GGR per day 124 120 91 97 102
VIP 81 72 48 43 37
Mass 42 49 43 54 65
Source: DICJ, Macquarie Research, April 2015
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
VIP GGR Mass GGR Slot GGR
USD mn
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
VIP YoY Mass YoY

30 April 2015 27
Significant supply additions coming through by end-2017
Macau Mass GGR should benefit from the opening of new properties that we expect to add
18%, 34% and 22% rooms to the casino industry in FY15, 16 and 17; but we remain cautious
on high-roller Tuhaos as the premium mass may be experiencing a similar structural decline
trend as VIP players. Hence, our sequential recovery forecast in mass GGR run-rate is 14%,
25% and 18% for the three years, lower than room capacity addition.
Fig 57 93% room capacity addition by the end of 2017
Date Company Property
Room
addition
Total casino
operated rooms Capacity growth
Dec 2014 16,631
2Q2015 Galaxy Galaxy Phase II 1,350 17,981 8%
3Q2015 MPEL Studio City 1,600 19,581 9%
Dec 2015 19,581 18%
2Q2016 Wynn Wynn Palace 1,700 24,681 7%
3Q2016 MGM MGM Cotai 1,600 26,281 6%
4Q2016 Sands Parisian & St. Regis 3,400 22,981 17%
Dec 2016 26,281 34%
2Q2017 MPEL CoD Tower 5 800 27,081 3%
2017 SJM Palace Lisboa 2,000 29,081 7%
2017 Galaxy Galaxy Phase III & IV 3,000 32,081 10%
Dec 2017 32,081 22%
With sharply falling GGR daily run-rate and now stalling visitation stats, we are concerned this
trend will continue into new capacity openings. Visitation, particularly from Mainland China,
has also pulled back from the 2H14 peak. January overall visitation was -2% YoY while China
visitation -1%, a trend that continued into Chinese New Year week in February. This might
have been attributable to ongoing visa restrictions, border congestion and weakening of
regional currencies prompting leisure Chinese travellers to head elsewhere.
Fig 58 Drop in GGR is now followed by stalling
visitation since Dec 2014 Fig 59 Daily GGR showing sharp downward trend
Source: DSEC, DICJ, Macquarie Research, April 2015 Source:LY.com, Macquarie Research, April 2015
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
Jan-10 Sep-10 May-11 Jan-12 Sep-12 May-13 Jan-14 Sep-14
Total Visitation GGR
YoY growth
-
200
400
600
800
1,000
1,200
1,400
1,600
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
Sep-13
Jan-14
May-14
Sep-14
Jan-15
Daily GGR run-rate (MOPm/day)

30 April 2015 28
Macau’s neighbouring Guangdong province remains the main source of visitation. Since the
Macau Government Tourism Office began disclosing the breakdown of Mainland visitation by
provinces of origin in July 2011, Guangdong as a % of the total has reduced from >50% to
close to ~40% as of 2014. More tourists from the rest of China are increasingly visiting Macau.
We believe that as the planned infrastructure improvements are completed from 2016 to 2018,
more non-Guangdong tourists will be attracted to visit Macau, due to the shorter travelling
time and more convenient boarding process
Infrastructure constraints and catalysts:
 Hengqin Lotus border began 24-hour operation starting Dec 18, 2014
 To be completed in 2017-2018, Macau-Hong Kong Bridge to link Macau to Hong Kong
International Airport with a 60m annual passenger handling capacity, enabling easier
access to major cities in China and globally
 Inter city traffic congestion relief: Macau light rail to be completed by 2018
 Permanent Pac On Ferry Terminal: expected completion remains unknown
 Macau Airport: expansion to enlarge capacity by 80%
 CRH Hengqin extension to link Lotus gate to Guangzhou-Zhuhai intercity rail and
Zhuhai airport (12m passenger annual capacity) to be completed by 2018
Further regulation tightening and uncertainty of concession renewal
During 2H2014, the Macau government took a series of actions targeted at the gaming
industry. The Ministry of Public Security (MoPS) held a senior-level conference in Haikou with
18 provincial police departments to investigate the cross-border gambling situation nationwide
across China. Macau and South Korea were put under the spotlight.
Shortly thereafter, the Hong Kong Police Department (HKPD), together with the FBI, issued
an investigation order on Cheung Chi-Tai, who has been one of the biggest shareholders in
one of the most important junket operators in Macau, and his assets were frozen.
On 16th Dec 2014, just days before Chinese President Xi’s visit, the AMCM and MoPS met
with most of the local bankers privately to pass on a message about setting up a strict and
live monitoring system on illicit money flow, and provide a list of names and information on
high-risk businesses that use the China UnionPay bank card system.
Fig 60 Major government action on regulating Macau gaming sector
Date Government bodies Details
3-Dec-14 MoPS, Provincial PD The MoPS held a conference with 18 provincial police departments to investigate crimes related to Cross-
border gambling, mainly focusing on Macau and South Korea.
11-Dec-14 HKPD, FBI Cheung Chi Tai, one of the biggest shareholders in one of Macau’s largest junket operators, Neptune
Guangdong Group, and seven of his closely held companies were subject to an order to have their assets
frozen.
16-Dec-14 AMCM, MoPS Require the local bankers to set up a live monitoring system; Require the local bankers to provide a list of
names and information on high-risk businesses that use the China UnionPay bank card system.
Source: Various news sites, Macquarie Research, April 2015
Shortly after Xi’s visit, the chief governor Fernando Chui noted that the Macau government
will make a comprehensive review on the gaming industry and then provide development
guidance for the gaming industry. Although the government did not clarify how the review
would be implemented and which aspects would be involved, we are concerned the
concession policy may be revised significantly. As the original concessions will expire in 2020
and 2022 for all 6 operators, uncertainty over shortening of the next concession period,
increasing concession fees or adding more concessions to diversify the market are gradually
increasing.

30 April 2015 29
Consensus remains overly optimistic on FCF and dividend
Our key differentiation from consensus lies in the way we model cash operating costs. We
divide each operator’s costs into four components: gaming tax, junket commission, labour
cost and other cash costs. Labour cost, while only accounting for mid-to-high single-digit
percent of GGR, represents ~50% of Macau operators’ total cash operating costs and is
seeing double-digit inflation due to structural shortage of local workers.
We forecast industry total cash operating costs to rise 48% from FY15 to FY17 amid new
property openings, during which time total GGR is likely to experience significant decline (-24%
FY15). Our sector EBITDA forecasts are 21-28% lower than consensus forecasts.
Given that all six operators continue to deploy capex (total US$14bn through FY17 and more
thereafter), FCF will likely come under pressure. We project industry FCF to turn negative this
year with modest recovery in FY16. As a result, we don’t believe the consensus sector
dividend yield of 5-6% is achievable.
Fig 61 Our Macau total EBITDA forecasts are 21-28%
lower than consensus
Fig 62 We see negative FCF in FY15 and FY16 FCF,
while consensus seems more optimistic
Fig 63 Our EBITDA forecasts are 21-28% below Consensus’ for FY15-16E
Macquarie Consensus MQ vs. consensus
EBITDA Currency FY15 FY16 FY15 FY16 FY15 FY16
Sands US$ mn 2,325 2,098 3,040 3,346 -24% -37%
Galaxy HK$ mn 8,530 8,592 11,872 12,942 -28% -34%
Wynn HK$ mn 4,000 4,789 6,685 8,156 -40% -41%
MPEL US$ mn 1,027 1,193 1,082 1,407 -5% -15%
SJM HK$ mn 5,610 5,171 6,216 5,932 -10% -13%
MGM HK$ mn 4,728 5,873 5,203 5,725 -9% 3%
Macau total US$ mn 6,303 6,443 7,990 8,979 -21% -28%
6,303 6,443
7,990
8,979
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
FY15E FY16E FY15E FY16E
Macquarie Consensus
Forecast industry EBITDA (USD mn)
-3,911
-1,064
701
3,808
-5,000
-4,000
-3,000
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
FY15E FY16E FY15E FY16E
Macquarie Consensus
Forecast industry FCF (USD mn)
Consensus forecast
of 5-6% dividend
yield is
unrealistically high
in our view

30 April 2015 30
Fig 64 Industry cash operating costs to rise 48% from
FY15E to 17E with major openings by all six operators
and double-digit wage inflation
Fig 65 EBITDA margins are likely to decline through
FY16E and FY17E
We believe consensus still hasn’t fully grasped the potential dividend risks, the negative
operating leverage from weak GGR, and cost inflation while major capacity additions are on
their way. In our new forecasts, we expect MGM, Wynn and SJM to slash dividend payouts
aggressively through FY16 from close to 100% to around 30% to 40% while preserving cash
generation for capex deployment on Cotai.
Fig 66 MGM and SJM’s dividends are most at risk
Sands Galaxy Wynn SJM MPEL MGM
FY13 payout ratio
Regular dividend 81% nil 100% 50% nil 35%
Special dividend 36% nil nil 22% 30% 73%
FY14 payout ratio
Regular dividend 40% nil 57% 71% 30% 35%
Special dividend Nil >40% 85% nil nil 54%
Current payout policy In the absence of
big projects beyond
Parisian, Sands
China will pay its
entire FCF (less
interest costs) in
dividends
Special dividend
only, will not initiate
a regular payout
policy given capex
commitments
ahead and
potential interest
rate hikes
Might not be able
to sustain 50%
payout if capex
overrun on Palace
Lisboa
30% dividend
payout quarterly
Hope to maintain
35% payout, paid
semi-annually. Will
consider special
dividend depending
on cash flow
situation
Payout Regular Special, may not
sustain
Regular til mid
2014
Regular but may
not sustain
Regular Regular + potential
special
Dividend cut risk Medium Medium High High Low High
0
2,000
4,000
6,000
8,000
10,000
12,000
2009 2010 2011 2012 2013 2014 2015E 2016E 2017E
Staff costs Others
USD mn
48% jump in
cash cost
10%
15%
20%
25%
30%
2012 2013 2014 2015E 2016E 2017E
Base Bull Bear
Industry total EBITDA margin (US GAAP)

30 April 2015 31
Singapore
We hold a cautious view on Singapore gaming sector, given declining GGR from the VIP sector
and weakening growth trend in the Mass market.
The anti-corruption and liquidity tightening in China definitely affects Singapore’s VIP gaming
business, in our view. One of the two casino operators, Genting Singapore (GENS), has tried to
offset this negative effect by implementing “direct credit extension”. However, we believe this is
just a one-off method which cannot be used for long or risks weakening GENS’ balance position.
Meanwhile, we believe that double digit volume growth in Singapore’s mass market would be
difficult to achieve due to government regulations and dependence on Malaysian and
Indonesian tourists. As Chinese, Malaysian and Indonesian make up around 40%
Singapore’s total tourists, the significant decline in tourists from these three countries due to
a series of incidents – including the Malaysia airline accidents, and SGD strength against
MYR and IDR – has largely dragged the Mass market performance.
We maintain our Underperform rating on Gents Singapore (GENS SP, TP SG$ 0.8).
Valuation
GENS is currently trading at 23x 2015E P/E and almost 2x P/B. With very minimal 4% CAGR
earnings growth that we project over the next 3 years and 7-8% ROE, these valuations are
clearly too expensive to us currently.
GGR Forecast: Credit extension will not save VIP while Mass will
dragged by weak tourism
Singapore’s VIP gaming volumes declined by 15% YoY in 2014, according to our analysis.
But, GENS’ VIP volumes declined by only 3% YoY as its VIP volumes remained quite high in
the 1st half of 2014 before starting to decline from July ’14.
Thus, GENS increased its market share to 58% in 2014 from 51% in 2013, according to our
analysis. We believe most of this market share growth was driven by high “direct credit” to
VIP players in 2014 while Marina Bay Sands (MBS) adopted a more conservative approach
and sacrificed “market share” to maintain profitability.
Fig 67 Base case rolling volume forecasts Fig 68 A modest recovery in Mass starting 3Q15
50 48
62
61
0
20
40
60
80
100
120
140
2011 2012 2013 2014
MBS GENS
99 104
123
101
US$bn
50% 52% 49%
42%
50% 48% 51%
58%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014
MBS GENS
Somesh Agarwal
somesh.agarwal@macquarie.com
+65 6601 0840
Recent publications
Mar 2015: More bad chips in store
Sept 2014: Hope can hurt

30 April 2015 32
Fig 69 GENS has a very high base of 1H14 volumes
to compare with in 1H15
Fig 70 MBS also saw continuous decline in VIP
volume since 2013
In the 4Q14 conference call, GENS’ management indicated that they would like to slow down
the pace of “direct credit” to VIP players. Based on this new strategy, we think GENS’ VIP
volumes will scale back to 2011-12 levels of around US$50bn in 2015E from US$60bn levels
in the last 2 years. This implies that GENS’ VIP volumes will decline by 14% in 2015E. We
believe this decline will largely disappoint the market, as consensus is still building in 15%
growth. The other issue for GENS is that in the 1st
half of 2015, it will be working off a very
high base of VIP volumes of 1H14.
Singapore’ mass market volumes grew by 6% YoY in 2014, and the growth was shared by
MBS and GENS, according to our analysis. MBS continues to lead the mass market with 57%
market share, which we believe is due to its location advantage.
We expect 5% growth in Singapore’s mass market volumes in 2015 while the consensus is
building in 10-15%, in our view. We believe double digit growth in Singapore’s mass market
would be difficult to achieve due to government regulations and dependence on Malaysian
and Indonesian tourists.
Fig 71 Singapore’s mass market volumes grew by
6% in 2014
Fig 72 GENS continues to trail MBS in mass market
due to location disadvantage
Given GENS’ renewed focus on “mass market”, we believe it could win back some market
share from MBS in 2015E. We are building in 7% mass market GGR growth for GENS in
2015E. However, we think the street is overly bullish, building in 15% mass market growth
due to high expectations for the new “Jurong Lake Hotel”.
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14
US$mn
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14
US$ mn
12
11
12
13
0 5 10 15 20 25 30 35
2011
2012
2013
2014
MBS GENS
26
28
28
27
US$bn
30
55% 57% 56% 57%
45% 43% 44% 43%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014
MBS GENS
GENS to slow down
direct credit
extension

30 April 2015 33
While the new hotel will add a significant 35% of hotel capacity, given its location and lower
quality than the current GENS hotels, we think the average room rate could be around
S$150-200 versus the current average room rate of around S$450 for GENS’ hotel rooms.
Thus, we see an uplift of only 3% to GENS’ group profits from 2016E from the new hotel.
Fig 73 We are building in 7% mass market GGR
growth for GENS in 2015E…
Fig 74 We are building in “non-gaming” growth for
GENS in 2016E – driven by the new “Jurong Lake
Hotel”
Tourist arrivals to SG continue to decline sharply
Tourist arrivals to SG overall were down 3% in 2014 out of which Chinese tourists were down
24% YoY. The trend has continued in 2015, with Chinese tourist arrivals down another 25%
YTD and Indonesian tourists down 17% YoY.
Indonesia, China and Malaysia make up around 40% of Singapore’s total tourists. While
Singapore’s VIP gaming depends mostly on Chinese VIP players in our view, the mass
market gaming depends mostly on Indonesia and Malaysia tourists in our view.
The sharp decline in all 3 of these countries’ tourists implies that both VIP and mass market
gaming volumes will remain under pressure in 2015E, in our view.
Fig 75 Tourist arrivals from all three key countries –
China, Indonesia and Malaysia - are declining sharply
Fig 76 Indonesia, China and Malaysia tourists make
up ~40% of Singapore’s total tourist arrivals, 2014
Source: Singapore Tourism, Macquarie Research, April 2015 Source: Singapore Tourism, Macquarie Research, April 2015
1,575
1,555
1,653
1,769
1,400
1,450
1,500
1,550
1,600
1,650
1,700
1,750
1,800
2012 2013 2014 2015E
US$mn
130
185
238 242 274 303
92
82
87 91
95
100
0
100
200
300
400
500
600
700
800
2011 2012 2013 2014E 2015E 2016E
Rooms Food & Beverage USS
S$m
-24%
-25%
-2%
-17%
-4%
-4%
-30% -25% -20% -15% -10% -5% 0%
2014
2015YTD
Malaysia Indonesia China
Indonesia
20%
China
11%
Malaysia
8%
Japan
7%
Australia
6%
India
5%
Philippines
6%
Others
37%
Jurong lake hotel to start
full operation in 2016E

30 April 2015 34
SGD’s continued strength against MYR and IDR also has a negative impact on
tourist arrivals
The SGD has gained as much as 44% against the IDR since the 2 casinos opened in 2Q10
while it has gained 15% against the MYR. These 2 countries are significant contributors to
Singapore’s “mass market volumes” in our view, and the weakening of those two currencies
further negatively impacts the tourist arrivals and hence the revenue potential from the mass
market in our view.
Fig 77 Since the casinos opened in 2Q10, SGD has
gained 15% against the Malaysian Ringgit
Fig 78 Since the casinos opened in 2Q10, SGD has
gained 44% against the Indonesian Rupiah
2.300
2.350
2.400
2.450
2.500
2.550
2.600
2.650
2.700
2Q104Q102Q114Q112Q124Q122Q134Q132Q144Q14
SGD / MYR
6000
6500
7000
7500
8000
8500
9000
9500
10000
SGD / IDR

30 April 2015 35
Valuations – Consensus too bullish on recovery in 2015
Consensus is building in 20% profit growth in 2015 and another 10% in 2016.
Fig 79 Consensus building in 20% profit growth in
2015E
Fig 80 Our estimates are 14% and 17% below
consensus for 2015E and 2016E respectively
Source: Bloomberg, April 2015 Source: Bloomberg, Macquarie Research, April 2015
Trading multiples still quite rich
GENS is currently trading at 23.1x 2015E P/E and almost 2x P/B. With very minimal 4%
CAGR earnings growth that we project over the next 3 years and 7-8% ROEs, these
valuations are clearly too expensive to us currently.
Fig 81 P/E multiples of 20-22x are not justified… Fig 82 …when earnings growth is only 3-6%
517
618
682
775
0
100
200
300
400
500
600
700
800
900
2014A 2015E 2016E 2017E
Consensus profit estimate
S$m
618
682
775
533
567 585
0
100
200
300
400
500
600
700
800
2015E 2016E 2017E
Consensus profit estimate Macquarie profit estimate
S$m
21.8
20.5
19.9
18.5
19.0
19.5
20.0
20.5
21.0
21.5
22.0
2015E 2016E 2017E
P/E
3%
6%
3%
0%
1%
2%
3%
4%
5%
6%
7%
2015E 2016E 2017E
Earnings growth

30 April 2015 36
Fig 83 P/B multiples of 1.3-1.5x are not justified… Fig 84 …when ROEs are only 6-7%
1.5
1.4
1.3
1.3
1.3
1.4
1.4
1.5
1.5
1.6
2015E 2016E 2017E
P/B
7.0%
7.1%
6.9%
6.8%
6.9%
6.9%
7.0%
7.0%
7.1%
7.1%
7.2%
2015E 2016E 2017E
ROE

30 April 2015 37
Australia
Economic backdrop remains dicey, but weakening A$ a positive
Australia’s economic outlook remains challenged, as the economy’s transition from mining to
non-mining growth looks to have faltered. Capex expectations data for 2015/16 revealed that
non-mining investment is on track to decline, rather than continuing to lift and provide a
source of demand and employment growth to take over from the mining investment downturn.
We model 2015 GDP growth of +2.1%, and +2.9% in CY 2016.
Growth rates and consumer confidence are likely to differ across Australia. We anticipate
Western Australia growth trends to remain soft, weighing on Crown Perth earnings, as
downgrades to key bulk commodity prices pose a challenge to domestic incomes. The
outlook for Sydney, and to a lesser extent Brisbane and Melbourne, should be relatively more
attractive, driving mid-single-digit growth in main gaming floor earnings for The Star (Sydney),
Crown Melbourne, Treasury (Brisbane), and Jupiters Gold Coast.
The combination of weaker commodity prices, challenged domestic growth environment, and
the RBA easing bias, will likely combine with a number of other factors to see the A$ push
below the US$0.70 cent mark. We expect a low of US$0.67 is likely during CY 2016.
The weak AUD setting remains positive for the Australian tourism sector, with the gaming
sector likely to benefit based on increased visitation, primarily driven by greater domestic
tourist visitation as overseas travel becomes relatively more expensive. In addition, the lower
AUD is also likely to boost turnover based on the translation effect, as foreign gamblers are
likely to bet at a greater size and thereby lifting turnover. We anticipate Echo’s Queensland
properties, most notably Jupiters Gold Coast, The Star, and Crown Melbourne, as likely the
greatest beneficiaries of increased tourist traffic.
Fig 85 Australia’s economic outlook remains challenged
2.98
2.72 2.66
2.47
1.90 2.03 2.15 2.20
2.67 2.78 2.91
3.08 3.19 3.29 3.46 3.42
0.60
1.10
1.60
2.10
2.60
3.10
3.60
Australia Real GDP (y/y % chg)
(y/y % chg)
Andrew Russell
andrew.russell@macquarie.com
+61 2 8232 9390
Recent publications
Feb 2015: The Star firing
Jan 2015: No royal flush, but
valuation appeals

30 April 2015 38
Fig 86 We have recently lowered our forecasts for the AUD vs the USD
VIP growth remains sustainable, however competition is strong
There appears no doubt that competition is increasing in the global VIP business, with
Australia accounting for approximately just 3.5% of global VIP revenue. Singapore remains
the most notable competitor for Asian VIPs/tourists. Singapore’s casinos offer a lower tax rate
(7%) on VIP gaming than Australia (10-12%), with the Singapore government focused on
attracting high value players to Singapore’s two integrated resorts – Marina Bay Sands and
Resorts World Sentosa. New property additions in Korea, Malaysia and the Philippines have
also heightened the competitive dynamic.
Despite these competitive pressures, we see a number of factors which support the
Australian gaming industry realising a greater share of the international VIP market. These
include:
 Lower VIP tax profile improves ability to attract junkets. We model VIP
commissions at ~1.70% of rolling chips turnover, representing a 0.20% premium to
most Asian regional competitors and a 0.45% premium to Macau. This greater
commission/rebate rate is underpinned by a lower VIP tax structure in Australia, with
domestic casinos taxed at a rate of 10-12% of VIP revenue, compared with 40% in
Macau. We view this setting favourably for Australian casino operators as it allows
them to offer greater incentives/rebates to attract VIPs, either directly or via junkets,
to Australian casinos.
 Excess capacity in Australian casinos. Contrary to Macau, domestic casinos
currently operate at a level which we view as below maximum capacity, while also
offering notable headroom to expand floor-space and VIP dedicated rooms. Capex
plans, as noted below, for the three major listed Australian and New Zealand firms
highlight the expansion opportunities that each operator currently plans. Per our
count, we estimate 1,566 gaming tables (including MTGMs) as at the end of FY14,
and 11,131 slot machines operating on casino floors through Australia. With a
number of new property openings slated over the next 5 years (as detailed below),
we model total gaming tables increasing by 644 tables to 2,209 in FY20, and slot
machines increasing by 858 machines to 11,989 in FY20.
 An alternative source of credit for players. Both Crown and Echo offer credit
directly to VIP customers. While direct credit as a percentage of overall VIP turnover
has declined in recent years as domestic operators increase their interaction with
junket operators, we estimate that ‘direct’ still accounts for approximately one-third of
overall VIP turnover, albeit with notably tight credit conditions offering reduced
default risk to Echo and Crown. With liquidity underpinning junket operations out of
China in question due to a clampdown on corruption and a tightening in shadow
bank lending, we view Crown and Echo’s solid financial footing and willingness to
extend credit, albeit under tight limits, as a positive.
0.92 0.94
0.88
0.82
0.76
0.70 0.68 0.67 0.67 0.68 0.69 0.71 0.73
0.76 0.77 0.78
0.60
0.70
0.80
0.90
1.00
AUD/USD (per end)
(AUD/USD)
Aussie operators
are able to offer
higher junket
commission than
Macau

30 April 2015 39
Fig 87 Australian VIP GGR growth has averaged approx. 12% annually since 2009. Our base case assumes
relatively flat VIP growth between FY16-19, before the opening of Crown Sydney in FY2020.
Fig 88 Australian VIP market share changes between
2009-2014 – By major casino
Fig 89 Australian VIP market share changes between
2009-2014 – By operator
0.67 0.73 0.78
0.95
1.06 1.10
1.64 1.70 1.74 1.78 1.83
2.17
2.58
2.75
0.0
0.5
1.0
1.5
2.0
2.5
3.0
FY09 FY10 FY11 FY12 FY13 FY14 FY15e FY16e FY17e FY18e FY19e FY20e FY21e FY22e
Crown Melbourne Crown Perth The Star Echo- Queensland Crown Sydney SkyAdelaide Other
VIPGGR(A$bn)
-6%
-6%
11%
-2%
5%
2%
-4%
-10% -5% 0% 5% 10% 15%
Crown Melbourne
Crown Perth
The Star
Echo - Queensland
Sky Auckland
Sky Adelaide
Other
-9.5%
11.3%
-0.1%
-1.7%
-15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0%
Crown
Echo
SKYCITY
Other

30 April 2015 40
Chinese tourists a major driver of Aust. GGR, boosted by a weak
AUD
The vast majority of visits to Australian casinos are from Australian residents, who account for
as much as 95% of casino visitation, per industry feedback. Our estimates suggest that
visitation by Chinese gamblers alone accounts for ~74% of Australian VIP GGR, representing
approximately 19% of total Australian GGR. As such, growth in total Australian GGR will most
likely be linked with growth in international inbound visitation.
Per Tourism Australia statistics, Chinese tourists now account for 11.6% of total inbound
visitors to Australia, with absolute numbers growing at an average of 17% annually since
2009. Tourism Australia forecast Chinese tourist visitation to Australia to grow at an average
annual rate of 8.7% through 2018, at which point Chinese inbound visitors will account for
14.0% of total inbound visitors.
In addition, a weaker AUD is likely to further boost Australian GGR, based on increased
visitation and the translation effect on gaming turnover. We view a weaker AUD as likely to
boost visitation to Australian casinos, as domestic tourism increases due to the cheaper
expense when compared against international travel, while Australia becomes a cheaper
destination for international tourists. On top of this, Australian casino GGR is likely boosted by
international tourists and the translation effect, especially VIPs, who generally have a set
budget in regards to gambling based on their local currency – a 10% drop in the AUD would
likely lead to increased turnover as players increase their bet limits.
Fig 90 Chinese tourism forecasts
FY12 FY13 FY14 FY15e FY16e FY17e FY18e
International Visitors - arrivals by market
China ('000) 575.3 678.8 764.8 845.0 920.9 1,003.5 1,083.2
Total ('000) 5,872.3 6,161.9 6,581.1 6,954.0 7,301.2 7,654.0 7,994.8
Chinese % of total 9.8% 11.0% 11.6% 12.2% 12.6% 13.1% 13.5%
% yoy chg 17.0% 18.0% 12.7% 10.5% 9.0% 9.0% 7.9%
International Visitor Arrivals – Chinese Visitors
Holiday 285.2 359.0 423.4 470.7 512.6 562.4 611.0
Visiting family & relatives 98.9 116.3 142.9 156.7 172.7 187.1 200.2
Business 61.3 66.0 62.2 65.2 69.6 73.9 77.6
Other 129.8 137.4 136.3 152.5 166.0 180.1 194.5
Total 575.3 678.8 764.8 845.0 920.9 1,003.5 1,083.2
Inbound Expenditure ($m) 3,932.8 4,657.6 5,221.5 5,762.1 6,286.1 6,847.1 7,400.5
International Visitor Arrivals - Chinese - Growth
Holiday 28.8% 25.9% 17.9% 11.2% 8.9% 9.7% 8.6%
Visiting family & relatives 16.0% 17.6% 22.8% 9.7% 10.2% 8.3% 7.0%
Business -5.1% 7.6% -5.8% 4.8% 6.8% 6.1% 5.0%
Other 7.7% 5.9% -0.8% 11.9% 8.8% 8.5% 8.0%
Total 17.0% 18.0% 12.7% 10.5% 9.0% 9.0% 7.9%
Inbound Expenditure ($m) 7.4% 18.4% 12.1% 10.4% 9.1% 8.9% 8.1%
Source: Tourism Australia, Macquarie Research, April 2015
Additional factors which support increased Chinese visitation to Australia include:
 Improved transport accessibility from China. During 2014, 100m Chinese tourists
travelled abroad, which is anticipated to increase to approximately 200m by 2020 per
industry forecasts. In 2014, approximately 765,000 Chinese tourists visited Australia.
To share in this growth to 2020, aviation capacity from China to Australia over the
next two years is expected to triple, per an agreement with the Department of
Foreign Affairs and Trade.

30 April 2015 41
 Simplified visa processing required. In a Hotels.com survey in 2014, Australia
ranked as the number 1 destination on a wish-list of top destinations by Chinese
tourists. Despite this, Australia does not even rank in the top 10 destinations that
Chinese tourists actually travel to, with Australia accounting for less than 1% of
tourist destinations frequented by Chinese tourists. Despite this, recent visitor visa
application data highlights that Australia continues to be a popular destination for
Chinese tourists. The past year has seen a 21% increase in visitor visa applications,
with Immigration Department figures showing close to 600k visitor visa applications
from China were lodged in 2014. More recently, Chinese New Year visitor visa
volumes in 2015 climbed 23%, relative to the corresponding period in 2014. With this
in mind, further growth in visitation numbers will likely continue as Australia’s visa
application process is simplified and online lodgement offered – a setting which
Australia’s Immigration Department aims to achieve by the end of 2015.
 Greater non-gaming attractions. Australia ranks highly with Chinese tourists as a
holiday destination, benefiting from a favourable offering across sightseeing, food,
hotels, gaming and shopping, supporting Chinese tourists’ desire for new
experiences.
Fig 91 Casinos are seen as a popular activity by
tourists… Fig 92 …especially Chinese, Taiwanese and Koreans
Source: Tourism Australia; February 2013 Source: Australian Productivity Commission; April 2009
Fig 93 Average trip expenditure by incoming tourists
to Australia
Fig 94 Average trip expenditure spent on gaming by
tourists in Australia
Source: Tourism Australia, Macquarie Research, April 2015 Source: Tourism Australia, Macquarie Research, April 2015
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
%age visited
49%
39%
36%
34%
30%
26%26%26%
24%23%23%
21%20%
17%16%15%
0%
10%
20%
30%
40%
50%
60%
4000
4500
5000
5500
6000
6500
7000
7500
8000
Avg. expenditure (A$)
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
Japan China New
Zealand
Other Total USA UK
%age of Tourists visiting casinos – by nationality

30 April 2015 42
New licences to boost the Australian market
Gaming licences in the Australian market are governed by the individual State gaming
authorities. There have been a number of recent licence announcements which we view as a
positive catalyst for the wider Australian casino industry. With Crown Sydney the next major
casino to open in mid-2019, we view this as notably positive for the overall market, with two
major casinos combining with the ongoing popularity of Sydney as a tourist destination to
boost overall Sydney VIP GGR. We model GGR for Sydney (The Star plus Crown Sydney) to
reach $2.5bn in FY21, up from $1.1bn in FY14, and accounting for ~35% of Australian GGR.
Fig 95 Australian GGR forecast – we model growth from $4.2bn in FY14 to $7.0bn
in FY21, representing a CAGR of +7.9%, driven by an increase in VIP revenue, mid-
single-digit growth in main gaming floor revenue, and new casino openings
We outline the key licence approvals below:
 Crown Sydney – Projected opening mid-2019.
o Crown has announced plans to develop and operate a six-star hotel
resort, including VIP gaming facilities, at Barangaroo South,
Sydney. Crown was issued a restricted gaming licence in July 2014,
which will be effective following the end of The Star’s exclusivity
licence in 2019.
o The hotel will feature approximately 350 rooms and suites, VIP
gaming facilities, apartments, restaurants and bars, retail outlets,
conference rooms and resort pool and spa facilities.
o We model total project spend of $2.0bn, offset by $500m in
apartment sales.
 Queen’s Wharf Brisbane – Construction likely commencing 2017
o The Queensland Government have outlined plans to develop a
large scale integrated resort and entertainment precinct, including
the issuance of a new casino licence, located at Queen’s Wharf in
Brisbane’s CBD. The final two proponents (two separate JV’s
involving both Crown Resorts and Echo Entertainment) unveiled
their design concepts in December 2014.
o An announcement on the successful proponent was due early
2015, but the change of government in Queensland has pushed
back this timeline to mid-to-late 2015. Construction is anticipated to
commence in 2017.
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
FY13 FY14 FY15e FY16e FY17e FY18e FY19e FY20e FY21e
Other
SkyAdelaide
Crown Sydney
Echo- Queensland
The Star
Crown Perth
Crown Melbourne
GGR (A$m)
$4.2bn
$7.0bn

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