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Asia Entertainment & Resources Message Board

  • shamrock562 shamrock562 Mar 1, 2011 12:02 PM Flag

    February RCT

    Should be out Thursday and be between 1.425B and 1.475B which is about 25% higher than guidance. Once again the hedge funds will probably punish the daytraders if they try to trade the news.

    AERL should substantially raise guidance later this month.
    The Galaxy VIP room announcement should happen by the end of the month(the Chairman recently reiterated an opening in "early 2011")and earnings must come out by 3/30.
    The hedge funds own 80-90% of the float and they're still buying.One fund accounted for 90% of the volume yesterday buying shares at the open, working the price down midday and buying at the close.

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    • The announcement could come as early as today. Last month they announced @ 11:00 AM on the 2nd.

      • 1 Reply to drjackcar
      • Tomorrow. Last month the 3rd was a holiday. The daytraders may be gone-good for keeping the chart intact-so it may be a nonevent but time is running out for the hedge funds to get more shares so they may be up to more games. They're keeping the price down today in case the daytraders buy at the close. As long as the hedge funds keep the price below $10.50 they're doing their job.

    • Doc,
      Add in 25% organic growth for next year and three more VIP rooms and you get to close to 4B RCT sometime next year. Give AERL a P/E of 5 with its 100% growth in revenue, 150m cash flow and 80% earnings growth and you get $25. Looks like a good long term investment to me.

      March 1, 2011 9:24 am by Josh Noble

      There’s a pretty simple formula for getting rich quick these days – secure a monopoly on something China has an insatiably appetite for. It can work on a company level – just look at Louis Vuitton and its handbags, Chateau Lafite and its fine red wines, and increasingly, Apple and pretty much everything it sells.

      It can also work on a national level. Just look at China’s rush for Mongolian coal. But nowhere is the China boom story more marked than in the former Portuguese colony of Macao.
      Casino revenues in the small city state-within-a-state rose almost 50 per cent y-o-y in February, hitting $2.5bn for a single month. Gaming revenues in the city in the coming year are expected to be 4 times that of Las Vegas. House prices are also galloping ahead, while annual GDP per capita puts Macao – at $72,110 – ahead of Qatar.

      And that’s just the start. CLSA, a Hong Kong brokerage, recently increased revenue growth targets on the sector to 30 per cent in 2011. It sees more record months down the line – the next, presumably, in May to coincide with a national holiday in China. CLSA’s call is simple: BUY the sector.

      A trawl through the stats at the big listed gaming firms can’t help but raise a few eyebrows. Wynn Macau – listed in Hong Kong – trades at 53 times trailing price-to-earnings, and 29.9 times price-to-book. Rival Sands China trades at a punchy 73 times trailing P/E, and 31 times 2011 estimates. Both stocks have gained over 100 per cent since the start of 2010.

      However, CLSA makes the point that consensus earnings estimates are too low.

      "We expect 30% revenue growth in 2011 and 25% growth in 2012. The average over the last 8 years has been 31% but there has been a lot of volatility around this number, mainly due to the VIP segment. We believe consensus estimates are closer to 15-20% yoy growth in 2011 and beyond and we have already seen a couple of upgrades. We believe more upgrades should come through in due course."

      With earnings growth like that, and seemingly insatiable mainland appetite for gambling, it’s hard to find reasons not to be bullish on Macao. There are some concerns about over-reliance on VIP gamers – and on the junket operators that bring punters in. But surely betting on betting wouldn’t be right without at least a touch of risk.


      My perspective on the holding pattern the stock has been in is essentially the same as your's. That there has been patient accumulation going on ahead of the 2010 results report (which has been telegraphed by the Q4 RCT numbers) and more importantly 2011 guidance. Any retailer who has been paying attention during the last month knows not to chase the bounces as the stock always has come back to $10. I suspect this is about to change.

      We've both done some modeling for 2011 and while the numbers differ slightly they bring me back to the same conclusion, that the stock is grossly under valued. The only question that remains is by how much. The market still hates Chinese reverse mergers so AERL will likely not get the multiple it deserves. The nice thing is that it doesn't have to and it could still be a double from here @ 10x forward EPS.

      As uncharacteristic as it is for me to consider adding here, seeing as I already own too many shares to be prudent, I may add a few thousand more for the ride to what I'm sure will be $12 at a minimum in the short run. Given the growth potential in Macau (and depending on whether they need more cage capital and how that capital is raised) the addition of 6-12 more tables by year's end could reasonably move the stock to the mid $20's still leaving it with a relatively conservative p/e.