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Las Vegas Sands Corp. Message Board

  • bjspokanimal bjspokanimal Apr 22, 2013 12:29 AM Flag

    MGM CEO Jim Murren's bullish comments on Vegas & Macau

    The recovery in Las Vegas is on solid footing and is set to outpace the rest of the country, MGM International CEO James Murren told "Squawk on the Street" Thursday.

    "It was painful having so much of our profits here in Las Vegas during the recession," he said. "But Las Vegas is firmly rebounding now. I would expect that Las Vegas as a hospitality market will outperform the other U.S. gaming markets over the next couple years. We'll probably have a record in terms of tourism this year."

    MGM is heavily exposed to Las Vegas, with approximately 60 percent of its business arising from operations in the city.

    Murren said that visitors are spending more money, while occupancy rates and gaming rates are rising.

    "The cream is rising to the top," he said, adding that the biggest players—MGM, Wynn, Caesars and The Venetian—"are getting a lion's share of the recovery market and I expect that trend is going to continue."

    MGM's expansion plan includes a new 20,000-seat arena in Las Vegas. The company has to "turn away literally dozens of concerts, entertainment events every year," Murren said, and the addition of a state-of-the-art arena will allow it to take advantage of these opportunities and bring more value to MGM resorts.

    Murren added that his company is having a "very, very solid year" in China and MGM expects to see cash-flow growth through 2013. "I'd expect to see continued growth, even understanding some of the macro trends," he said. "More people are going to Macau than ever before."

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    • @ Birdnest and Colt:

      MGM was a pleasant surprise for all of us... earning a penney when the mean estimate was a 10 cent loss.

      It's not like Murren didn't beat the table a bit in the CNBC interview.

      This is also great for LVS in that it's indicative of continued, albiet slow, recovery and improvement in Vegas. The big gap in stock price performance between Sands China (SCHYY) and LVS is due to investor perception that Singapore, Vegas and Bethlehem will lag Macau, so any indication that those resorts that are not part of Sands China but ARE part of LVS will improve... will help close that PPS gap.

      Singapore was OUTSTANDING. If Marina Bay's table hold had been just "normal", then LVS's EPS would have been 81 cents a share instead of 71 cents. That's big.

      And to think CityCenter actually turned a profit. Wow.... THAT, I didn't expect at all in 2013.

      Las Vegas is now seeing home price appreciation in the mid-teens YOY... and that should generate a "wealth effect" that builds gaming volumes city-wide down there.


    • Murren added that his company is having a "very, very solid year" in China and MGM expects to see cash-flow growth through 2013. "I'd expect to see continued growth, even understanding some of the macro trends," he said. "More people are going to Macau than ever before."

      More and more people going to Macau than ever before?????
      Am I missing something?????? with a 1.6% growth quarter over quater yoy.

      Sentiment: Strong Buy

    • MGM very high on my radar. The only casino play that has never recovered. I am watching this closely right now. Something big is up with MGM. They have to do something, whether it is dumping CC or selling other assets.

      • 1 Reply to jscolt45
      • Let me begin by saying I'm not a fan of MGM stock. I could be wrong... the best of them often are... but it doesn't meet my criteria.

        As you know, I'm a contrarian investor who has tried to adhere to the lessons of Rothschild, Lynch, Templeton, Buffett, etc. for decades... and I've never doubted the lessons I've learned as they've worked well. MGM meets one of the criteria in that it is down, losing money, and is cheap. One could also argue that it meets the criteria of having potential, as defined by the fact that MGM is 60% Vegas exposure and Vegas is recovering.

        My problem with MGM is that the "potential" is not evident in the company's internal business plan, but rather, is limited to the external macro environment it operates in. Vegas is in an upswing, but is no longer on a "growth" trajectory... it's a mature market now that will bear cyclical swings. MGM is in macau, but way behind there and years from building on cotai, off-strip, in an also-ran timeframe.

        Sands boomed with the recovery because they had the right plan, with the right venues, in the right locales. MGM has none of that, so here we are, "mid-cycle", and they're still losing money and building 20,000 seat arenas in mature geographies. They are contrarian, but the requisite "potential" to grow on an inter-cyclical basis is not there, IMHO.

        FTR, I'm increasingly going with low-beta stocks... semi-counter-cyclicals in the .40 to .80 range. Contrarianism is tough in a market hitting records, so outside of the emerging markets, I'm ware of cyclicals. M-REIT's are big with me now, as I look for the fed to end QE3 before they ease up on fed funds.

        GLTY with MGM just the same though, my friend.


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