February 12, 2013, 10:10 A.M. ET.Macau Gaming to Slow, Stocks to Be Fine, Wells Fargo Says.EmailPrint
smaller Larger By Ben Levisohn
Don’t expect the Macau gaming revenues to surge in February–but don’t expect the gaming stocks to plunge on the news, said Well Fargo’s Cameron McKnight in a report on the gaming sector today.
Associated PressMcKnight expects sales to come in between 5% and 10%, below Wall Street forecasts for revenue growth of 10% to 12%, and no faster than January’s revenue 7% growth. But if the numbers are massaged to account for as shorter February, revenue growth would be more along the lines of 9% to 14%–and likely strong enough to keep investors happy.
Oh, and McKnight acknowledges that his numbers might just be wrong. He writes:
The week of Chinese New Year is a huge swing factor, and there has been a significant increase in hotel rooms and tables to accommodate the capacity crowd during that important week…We believe our estimate is conservative, and risk is likely skewed to the upside given the substantial increase in supply over the past six months.
He expects Las Vegas Sands (LVS) and Melco Crown (MPEL) to gain market share at the expense of competitors like MGM Resorts International (MGM) and Wynn Resorts (WYNN), McKnight says. He writes:
LVS typically picks up share during peak holiday periods due to the grind and middle mass positioning of its properties. We expect LVS to see an additional lift this year from (1) 5,900 additional hotel rooms and ~400 new gaming tables, and (2) the new bridge connecting Sands Cotai Central (SCC) to the Four Seasons/Venetian. We also believe MPEL will gain share from the incremental hotel inventory at SCC.
Sands has gained 0.02% to $53.85 today, while Melco has climbed 0.6% to $20.60. Wynn has advanced 0.3% to $123.43 and MGM has jumped 1.6% to $13.26.
What kind of analyst writes a bonehead statement like this?:
Associated Press (Really? AP? Paragraph before this says he's from Wells Fargo) McKnight expects sales to come in between 5% and 10%, below Wall Street forecasts for revenue growth of 10% to 12%, and no faster than January’s revenue 7% growth. But if the numbers are massaged to account for as (a?) shorter February, revenue growth would be more along the lines of 9% to 14%–and likely strong enough to keep investors happy.
Does that mean maybe 7.5% below an increase YOY of 10% to 12%??? That would be an increase YOY, then, of 9.25% to 11.1%, which BOTH are "faster" than January's YOY growth of 7%!!
Am I missing something here or is this guy having a "bad math" day?
I used to like Kevin Mc Knight but his comments are worth nothing, they should hire me, I bet I have been to Macau many more times than this guy since 2002.
Kevin write something about the increase in EGT gaming and slots at LVS and MPEL up on last conference calls 48% and nearly 100% respectively at both companies yoy.
Do you understand how the game changes with that Kevin, it means huge increases to bottom lines if trend in trajectory continues at the same pace. HUUUGE.
We do currently 2 Billion a year in Macau on these gaming machines per year. If we increase this at the same rate (48%) that just LVS ETG gaming and slots are growing we will have over 12 Billion dollars in Macau revenues on these machines alone in just 60 months, by then maybe even more and that is $3 Billion per year for LVS.
Write a collumn about that Kevin, I will send you a invoice later my friend.