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Asia Entertainment & Resources Message Board

  • drjackcar drjackcar Feb 11, 2013 10:32 PM Flag

    poster who asked the question about AERL's books

    I don't know what is going on, I saw your question but when I came back to answer it it had disappeared. So pardon me if you ask another question that I do not see.

    On the matter of their accounting, a few things to consider. 1. The documentation provided to AERL's accountants verifying the revenue they receive from the casinos comes from the casinos themselves. These publicly traded companies include LVS and MPEL as well as Galaxy which trades in HK. If you go back and look for a Seeking Alpha article (can't remember the author's name) he actually provided a photo copy of one of these documents. One that management circulated (I was sent a copy) in order to dispell any concerns about the accounting. The documentation of AERL's winnings is also reviewed by gaming officials and the Macau taxing authorities. The degree of redundant checks by multiple parties makes cooking the books a virtually impossibility. 2. The amount of business they do is reliant on the amount of cash they have available to lend out as credit to players. This cash is verified by the casinos before AERL is allowed to operate in their rooms. The amount of cash AERL is able to put up also enables them to receive LOC's (lines of credit) from the casinos. 3. They pay a dividend and have financed their buyback program from free cash flows generated by the business. 4. They are in the process of applying to the HK exchange. A process that requires their auditors to provide detailed documentation to the HK exchange authorities for the years they have been a public company as well as previous years. The company's books are being heavily scrutinized during the application process. 5. AERL's accounting firm has not been involved in any of the accounting scandals of Chinese small cap companies. 6. The margins AERL gets from their business are well known from public filings of HK listed companies as being comparable to the margins of other junket companies.

    That just about covers it.

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