Place your bets: The Venetian is the strongest casino brand in Macau

Sands China trumps mass market: Our survey of c2,200 visitors into Macau at various border gates highlighted three things. Firstly, it showed that The Venetian has the strongest brand in Macau and is the preferred casino to visit. Secondly, it showed that The Venetian also attracts players with better demographics relative to its peers, namely a younger “white collar” crowd with a higher gaming and non-gaming budget.

This gives us greater confidence in Sands China's marketing function and also on the company's ability to execute on Sites 5 & 6. This is more so the case given the recent efforts the company has put into building relationships with travel agents in Mainland China and advertising its non-gaming functions more aggressively.

Strong brand needs to be matched with loyalty programs: Notwithstanding the brand strength, it is interesting to note the recent challenges that Sands China has had in retaining its mass market share, particularly at The Venetian. We think that this was driven by the pull-back in reinvestment rates on mass market, which meant that while Venetian was attracting players, it was not able to retain them (perhaps to the benefit of its neighbours).

However, with some of these decisions being reversed, we think that Venetian has a strong chance to regain market share – an assessment corroborated by our survey. Such market share gains may positively surprise consensus.

Phase 1 of Site 5 needs to be priced in: We had been conservative on the opening of Site 5 and were expecting opening in late 4Q12. However, after our recent visit to Macau, we believe that Sands China is making substantial progress on building Phase 1 of Site 5, and hence we think the company’s scheduled opening in mid 1H12 is feasible. Hence, we have factored this into our forecasts. The new amenities will go some way towards enabling Sands China to recapture mass market and VIP market share.