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Melco Crown Entertainment Limited Message Board

  • squeezetracker squeezetracker Apr 16, 2014 7:01 PM Flag

    More Quant Fun for the Longs

    If Macau's GGR is "only" 15% this year, and MPEL does no better than to hold share, then revenue will beat the consensus of $5.77B by a few hundred million...

    Given MPEL's operating leverage, that would absolutely CRUSH current estimates for ebitda, adj ebitda, earnings and roic... and that mashing assumes COD Manila generates no incremental revenue (which is the consensus as not even Bain has any revs for CY 2014), and further assumes that MPEL does no buybacks after getting what will likely be 99% approval for that 10% authorization now sought to grab shares during times like these.

    Not a single analyst, not even Bain, is focusing on the upside here... that means only the buyside pm that have been gobbling up all the shares they can find are thinking as we are here. Isn't that darling? LMAO

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    • The thing soiling the pants of holders has been the unfounded fear GGR growth will fall to less than 10%.

      Of course what that ignores is the "predicament" MPEL and the other gaming stocks will have over the next 5 years being what to do with all the money. Buybacks, higher dividends, debt retirement, and a bigger regional footprint is where things are headed. Bumps along the way? Yup. Big ones? Maybe a few. A doubling of this ridiculously depressed price? Probably in 18 months.

    • The reason the analysts aren't counting on COD Manila to contribute any revs for CY14 is because Bain and others have ways of verifying when COD Manila is likely to open, and I think they also believe it to be October (i.e. end of year) like I have been reporting. A lot of people are still clinging to the earlier "middle of 2014" quotes of long ago reporting. Of course, even an October opening, except for hiccups in rollout and ramp up, SHOULD contribute some decent revs, but I guess they don't want to expect too much.

      tf

      Sentiment: Strong Buy

      • 2 Replies to tfberynell
      • tfberynell,
        As for Manila, our baseline modeling is for $0 revenues this year, but they will have some. As for when it will begin? Ho stopped saying "mid year" about 5 months ago, rolling that to 3rd Q of this [calendar] year"... the reason analysts do not have anything in their models for that this year -- or next year until Bain just began inclusion two weeks ago -- is because they do not have reason to stick their neck out until the company begins framing what they think they can do with manila and MSC for that matter. On the last point, only 2 of the 10 or so analysts published on MPEL have any rev/ebitda in modeling for even 2015! Same for MSC... lots of upside revision coming, and to date, only the guys, incl us, who have been gobbling up shares down here below the 50d ema, are modeling the likely outcomes and realizing what that will mean to 2014 and more significantly, 2015 revenues operating leverage, ebitda and eps.

        Beyond that, you give the analyst community far too much credit. From published reports, you can see Bain does more work, and work that is actually meaningful, then the rest of the sellside combined, but he knows nothing more than management and the gaming commission data don't give him. The hedge fund community knows EVERYTHING the sellside communicates to them, and then individual pm know the things they don't want to share because that is the advantage they covet and protect.

        Above, toast2234 suggests that "holders are soiling their pants over fear GGR will fall to less than 10%. We have not soiled our pants over anything on this name since we got involved and neither has any hedge fund mgr in our circles. Nor do we, or any other pm we know running a hedge fund or mutual fund, think Macau's GGR will fall below 10%. We'd assign that an extremely low probability, and if we thought that we'd definitely be short MGM, LVS and WYNN if not MPEL. Hedge funds are buying down here, not selling out or shorting.

      • Personally I think there is to much noise on the GGR, VIP play is clearly dropping a little but mass play is going gang busters "SOME 30% PER YEAR". As all of you now and I will spell out again for these analysts, mass is 4 times more profitable than VIP play.. When the mass starts dropping then only that will get me concerned regarding Macau.

        If we can hold market share we will be more than ok. I have to say also that during the latter part of the year we will see a major spike in visitation September through December. The mass play will gain more steam as people flock to Henqin and ultimately spill on to Cotai during the bigger holiday periods. These will be quality day trippers spending money and not the free day trippers that came from the mainland last year that Macau ultimately blocked.

        Also for the first quarter from what I have read the visitation was up some 4% but that was really up 9-10% taking in to account of the now blocked free day trippers that didn't spend much money anyway.......Relax guys we will blow earnings away.

        Sentiment: Strong Buy

 
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