Hey Kostaburger: any thought on P/E SNFCA and current share price? I am all ears. I have never seen a company with so much massive cash and profits and such a great management team and at the same time the share price flounders
AERL info foir you Navy Price: $4.26
Price Target: $16.00
Analysts: David Bain
Rolling chip turnover begins upward inflection into easing comps; Adjusting 1Q13 estimates due to low hold
March rolling chip turnover (“RCT”) results of $1.52b beat our $1.33b estimate and marks a 19% increase MoM. Results correlate with recent management comments suggesting that AERL is more comfortable with China’s current economic backdrop and is beginning to ramp credit extension to its agents. We are adjusting 1Q12 EPS downward solely due to AERL’s March hold (“luck factor”), which was lower than our modeled 2.85% theoretical win rate.
We believe AERL will file its annual report by late this week. At that time, we expect it will announce its semi-annual dividend payment, which we calculate to be ~$0.10 per share.
1Q13. 1Q13 EPS goes to $0.41 from $0.50, which solely reflects AERL’s lower than theoretical win rate for March. Our RCT results for 1Q13 goes to $4.1b from $3.9b. We believe better than modeled RCT results demonstrating a potential growth inflection outweigh March’s negative low-hold/luck impact.
YoY RCT growth should resume by June. In mid 2Q12, AERL took a conservative stance toward extending cage capital to its agents, deeming the China macro environment inappropriate for aggressive lending. We continue to expect AERL to become moderately more proactive with additional lending in stages, matching a market RCT rebound by late 2Q13.
By 3Q13/4Q13 we expect AERL to exceed market RCT results given its recently augmented network of agents (little player-base overlap from agent/room acquisitions), easing comparables, and its new revenue share remuneration model allowing for expansion to all 6 Macau concessionaires versus just 3 under its former model.