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Gaming Partners International Corporation Message Board

  • jdnoles90 jdnoles90 Oct 25, 2007 12:59 PM Flag

    Motley Fool Rec today!!!!! I bought


    Gaming Partners International

    This fact will leave you scratching your head: Although the 10 largest casino and gaming stocks are up an average of 26% year to date, Gaming Partners International (Nasdaq: GPIC) -- a leader in table game equipment and RFID chips (gambling chips that use radio frequency identification technology to help track bets and prevent counterfeiting) -- is down 50%.

    Things started going sour in April when Gaming Partners delayed filing its 10-K and was threatened with several class-action lawsuits and delisting from the Nasdaq. The situation got worse when the company missed expectations substantially in both the fourth quarter of 2006 and the first quarter of 2007. Now it's hit rock-bottom after a disappointing second quarter. The culprit was the delay by the customer of several large orders of RFID chips for Macau. As a result, revenue dropped 37% year over year through the first two quarters, and expected profits turned into a $0.13 per-share loss.
    Who's Gonna Be the Big Winner?

    Despite these struggles, at 1.1 times revenue, the valuation here is compelling -- especially for a company with nearly $18 million in backlog orders and the potential to see 10% operating margins as more casinos adopt RFID chips. Gaming Partners has the exclusive rights to sell RFID chips to U.S. casinos, and the technology has not been widely adopted here yet. The company should be on the ground floor as adoption accelerates.

    Moreover, it's not surprising that the Macau customers were a bit hesitant earlier this year. With the enormous new Venetian Macau casino opening in August, the industry was nervous about excess capacity and increased competition. But Gaming Partners has since delivered 2 million chips to the Venetian Macau and completed a delivery to the new Wynn Resorts expansion. That's significant. After all, when these casinos need more chips, odds are they'll come back to Gaming Partners.

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