Macau gaming's gross gaming revenue jumped 15%

Thanks to its robust mass market segment.

According to Maybank Kim Eng, first half GGR ended on a high note, growing 15% YoY powered by the mass market segment growth of 31% YoY, which was more than three times the VIP segment growth of 10%.

Unlike a rising tide that lifts all ships, the growth has not been uniform across all operators and instead has favored those with new supply capacity such as Sands China.

Here's more from Maybank:

Moreover, operators who are targeting the high limit premium mass market base through segmentation have begun to reap rewards, such as Melco who clinched the largest market share gains in 2Q. Casinos that are situated in Cotai are also benefiting from a greater shift of GGR away from the Peninsula.

Maintain Overweight, sector valuations attractive. The sector currently trades at 12x FY13 EV/EBITDA, far below the peak of 13x in May and presents an attractive opportunity to accumulate in a sector that continues to offer strong average EBITDA growth of 16% with selected counters offering up to 5% dividend yields.

In order of preference, we like Sands for its mass market exposure, Melco Int’l for its diverse emerging pipeline and SJM for market’s undervaluation of Cotai.

We have a HOLD rating on Galaxy due to its rich valuations and a SELL rating for Wynn as its market share continues to decline. 

2Q Preview; Melco and Sands lead growth. Moving into 2Q earnings season, Melco and Sands are expected to show the highest YoY (+40% and +58%) and QoQ (+4% and +8%) percentage increments above our second quarter EBITDA relative to peers.

Against this outlook, we forecast that Wynn will be the only operator to record a decline in EBITDA both on a YoY (-15%) and QoQ (-22%) basis, due to its market share falling to a record low of 10.6% and lower than expected win rates of 3.1% for 2Q13.

SJM is also likely to record a slight 1% QoQ decline in EBITDA in the 2nd quarter despite its expected organic growth of 11% YoY.