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Alcoa Inc. Message Board

brinerbriner 35 posts  |  Last Activity: 9 hours ago Member since: Apr 30, 2009
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  • Reply to

    GAAP and non-GAAP reporting

    by brinerbriner Dec 24, 2014 8:36 AM
    brinerbriner brinerbriner 9 hours ago Flag

    I know, it's valuation 101 but I thought I'd mention it anyway since there is so much misinformation out there.

  • Dec 26 (Reuters) - The People's Bank of China (PBOC) is weighing changing rules governing how loan-to-deposit ratios are calculated at banks, a move that would boost liquidity conditions, sources with direct knowledge told Reuters.

    The banking-sector sources said the PBOC, during a meeting with domestic financial institutions, revealed it is planning to include savings held by banks for non-deposit-taking financial institutions into banks' deposits, which will expand the base for calculating loan-to-deposit ratios.

    Under the current rules, Chinese banks are allowed to lend up to 75 percent of their deposits.

    According to the sources, 24 major financial institutions were told at the meeting that even if interbank deposits are included in the base, they may not need to set aside additional reserves, leaving more liquidity available for lending and investment.

    The move is seen as another attempt to reinvigorate productive business investment without resorting to an across-the-board cut to reserve requirement ratios (RRR).

  • brinerbriner by brinerbriner Dec 24, 2014 8:36 AM Flag

    Here is some boiler plate language about non-GAAP reporting.

    "We provide investors with non-GAAP gross profit and gross margin, non-GAAP operating income and operating margin, non-GAAP net income and non-GAAP diluted earnings per share because we believe it is important for investors to be able to closely monitor and understand changes in our ability to generate income from ongoing business operations. We believe these non-GAAP financial measures give investors an additional method to evaluate historical operating performance and identify trends, an additional means of evaluating period-over-period operating performance and a method to facilitate certain comparisons of our operating results to those of our peer companies. We also believe that providing non-GAAP operating income and operating margin allows investors to assess the extent to which our ongoing operations impact our overall financial performance."

    The point of mentioning it is the loss of $1.18 appearing on Yahoo's page is in no way a reflection of what EPS is in cash terms. The -$1.18 number has to do with accounting rules applying to the change in the valuation of the recently acquired rooms, required because they are performing better than expected when the original valuation was assigned to them at the time of the acquisitions. If you strip out those changes as well as non-recurring items like the cash payments to the room's prior owners (which drops to $13M in 2016) 2014 EPS as of the end of Nov. is close to $0.30. Even if you include the cash payments for the acquisitions the loss for the year is roughly $8M, or -$0.14, not anywhere near -$1.18.

  • Reply to

    briner

    by jugusheadus Dec 17, 2014 9:15 AM
    brinerbriner brinerbriner Dec 19, 2014 5:12 PM Flag

    That guy has been talking trash since the days of the Chicom blowups. Back then he was writing they were a fraud, the money wasn't real, they had ties to the triads, that kind of thing. Then it was the CFO didn't understand GAAP accounting, the shareholders don't own anything, I can't remember all of it. You know, scare tactics. None of it is true. I'm sure he is writing the same sort of stuff now too. He's your basic message board troll.

  • Reply to

    briner

    by jugusheadus Dec 17, 2014 9:15 AM
    brinerbriner brinerbriner Dec 17, 2014 3:10 PM Flag

    They definitely have the balance sheet to take on a bigger room. Especially with roughly 60m in lines of credit extended to them by the concessionaires. The question they always take in to consideration is whether conditions are right to add tables from a credit risk perspective. Their approach has been to hit the gas when things are good but take very little risk when they are not. So even though overall roll for VIP is way down, if they think credit conditions have improved they will be looking to expand and extend more credit. As I'm sure you know the more business they do on credit the lower the commissions they pay so their margins get better. But they have proven they are willing to wait a very long time before getting more aggressive.

  • brinerbriner brinerbriner Dec 16, 2014 3:32 PM Flag

    I will be too. If I were them I'd have to take a hard look at de-listing in the US. They have approximately $230M in cash and owe $39M for the rooms they acquired so call it $190M. The market cap is now below $80M. They have no institutional/fund support and the only analyst paying attention to what is going on is Bain. Once they list in HK they should transfer all the shares there, simplify things and reduce costs.

  • Reply to

    article on IKGH from Macau Business Daily

    by brinerbriner Dec 5, 2014 7:32 AM
    brinerbriner brinerbriner Dec 13, 2014 4:33 PM Flag

    Just be a little careful with the assumptions on the buyback. Listen closely to what Preissler said about the considerations the company has when evaluating whether to buy back stock. He cited "corporate strategies" which, if you go back to the Q2 call, refers to their feeling at the time they could better use capital in the cage to run the business. Roll volume is obviously down from then but if they are looking at moving in to a better room, say one with more tables, they may still feel as though the cash is needed in the cage. On the other hand the ROIC for money spent on buying stock down here is, I believe, impossible to match from operations. If anything the accretive price to EPS for buying stock has gone up so it could be closer to $3.50 these days. But I do agree the market could read the eventual listing announcement date as setting the clock ticking for restarting the buyback. So depending on how much money they are willing to spend the stock could move up the way it did a few years ago when tax loss selling took it down to $2.50 in Dec. only to see it hit $4 fairly shortly after in 2013. This time around going from around $1.50 to $3.

  • Reply to

    just the numbers

    by brinerbriner Oct 31, 2014 7:23 AM
    brinerbriner brinerbriner Dec 5, 2014 2:07 PM Flag

    I am of the belief the only thing that matters is RCT. Hold takes cares of itself over time. The important variables are the revenue share percentage and the commissions to agents. Commissions are abnormally high right now because they want to limit the risk of issuing credit. Once you know where those figures are modeling earnings is pretty easy. They wisely have been recruiting cash play agents with the downside being those agents get bigger commissions. It is possible revenue share could go up as the casinos fight for more of the VIP business. Like they have done in the past they hunker down in bad times like these to preserve capital for when things get better. What we do not know is when they will get better and how much better they'll get.

  • Here is part of it.

    Iao Kun Group has the acquisition of small junket operators here as one of its main opportunities to grow its business in Macau in the near term. Outside the territory, the VIP rooms in the new Asian gaming locations of the Philippines, Korea and Vietnam are the best options to maintain long-term growth. In the third quarter of this year, the junket operator registered an operational loss of US$1.1 million, while revenues from VIP rooms dropped 15 per cent.
    Despite last quarter’s performance, investors maintained their trust in the group’s bright prospects. In a note to clients yesterday, Sterne Agee, for example, decided to keep its buy rating and target price, a sign that investors are expecting good profits in the future.
    The acquisitions of smaller junkets in Macau and the expansion to other Asian gaming destinations are two strategies that Iao Kun will pursue in the future. The brokerage says Iao Kun’s management cited in a meeting with investors several growth opportunities in Macau in the upcoming months. Smaller gaming promoter acquisitions, new rooms and adjustment to higher performing rooms in its casino partners are the main strategies for the company to expand its business and profits in Macau. Outside Macau, the new casino buzz in places like the Philippines, Korea and Vietnam is also an opportunity to create new VIP rooms and attract new players.

  • Reply to

    Bain on 3q14 part 1

    by jane_tate Dec 1, 2014 1:37 PM
    brinerbriner brinerbriner Dec 4, 2014 12:26 PM Flag

    Lets see if the interest rate cut can help VIP a little going in to next year.

  • No surprise to see RCT down with the rest of the VIP results in Macau. The win rate is normalizing for the year after being higher than normal in Q1 and below normal in Q's 2 and 3. I estimate Q4 income to be something close to $9.5M thru Nov., added to 9 months operational income of $9.2M or $18.7M for the year.

    The basic story of this year is IKGH was doing very well early on with RCT coming in around $1.7B per month. Then the corruption campaign started having a strong effect on VIP throughout Macau and has not let up since. Management has taken a conservative approach to credit extention for some time now and as it turns out that was very wise as the rest of the junket industry is struggling with debt collection. Some junkets have over 50% of their collectables outstanding for over 1 year. IKGH's DSO's that are older than 90 days are less than 20% of their markers receivable. They see no reason to reserve for uncollectable debt. That puts them in a strong position to grow their agent base and business if the effects of the corruption campaign diminish and if lower interest rates help VIP play in 2015.

  • Reply to

    Bain on 3q14 part 1

    by jane_tate Dec 1, 2014 1:37 PM
    brinerbriner brinerbriner Dec 2, 2014 5:26 PM Flag

    2) lack of reliance for outside funding/liquidity sources

    So, along with the sensationalized articles talking about the demise of the junket model due to longer repayment periods of gambler debt (which is not effecting IKGH because of their conservative capital management......putting them in a strong position to pick up more agents looking to work with a well funded junket) the reference in the Barron's blog about private investors pulling money out of IKGH's cage is INACCURATE since IKGH does not rely on outside sources of funding. The recent drop in cage capital is due to the payments to the previous owners of the Bao Li and Le Royal Arc rooms, both of whom have received added incentive payments because the rooms are OUTPERFORMING the metrics established when they were purchased.

    Which means when a certain poster (who is now on ignore because I just can't deal with the lies any more) was wrong AGAIN in posting about the value of the new rooms to IKGH's business, whether IKGH is being effected by longer DSO's, and in assuming Karen Tang knew what the heck she was talking about regarding the reduction in cage capital. His track record for being wrong 99% of the time is intact.

  • brinerbriner brinerbriner Dec 1, 2014 9:04 AM Flag

    Not to mention.....
    According to Karen Tang of Deutsche Bank, China's recently announced rate cut should help spur a VIP recovery in Macau throughout 2015.

    Tang notes that two more rate cuts are expected in China throughout 2015, further adding conviction to a belief that Macau gaming stocks turned positive in October.

    According to the analyst, junkets have seen repayment cycles returning to normal levels as VIPs have sold properties to repay debts following the Chinese government's "relaxed" home purchase restrictions in September.

  • brinerbriner brinerbriner Dec 1, 2014 9:02 AM Flag

    Now that you've wet your pants in excitement over that broad brush article I have to ask if you listened to this morning's call? Specifically the comments about there being no change to IKGH's DSO's (which are much healthier than the rest of the industry) and how their conservative capital management has kept them from the pitfalls a lot of the other junkets have fallen victim to in terms of outstanding debt.

  • According to Karen Tang of Deutsche Bank, China's recently announced rate cut should help spur a VIP recovery in Macau throughout 2015.

    Tang notes that two more rate cuts are expected in China throughout 2015, further adding conviction to a belief that Macau gaming stocks turned positive in October.

    According to the analyst, junkets have seen repayment cycles returning to normal levels as VIPs have sold properties to repay debts following the Chinese government's "relaxed" home purchase restrictions in September.

    "We believe the interest rate cut's positive impact on property prices will improve junket liquidity and have a positive wealth effect on VIP players," Tang wrote. "Historically, China property prices and Macau VIP revenue had a good 73 percent correlation."

    Now if the effect of the anti-corruption campaign ever wanes maybe RCT moves back towards $1.7B per month and a $0.50 annual EPS run rate.

  • brinerbriner brinerbriner Nov 27, 2014 9:23 AM Flag

    That is a theme you have latched on to and have repeated any number of times without a shred of financial evidence to back it up. You also don't seem to understand, even though the company has mentioned it any number of times, what the rationale is that justifies the acquistions. The rooms were not just acquired to give IKGH eventual exposure in all of the concessionaire's casinos, or to lower the volatility of hold by increasing the table count, or even to gain market share. When they buy a room they mostly look at the stable of agents who use the room. They look at the default rate of those agent's clients, whether the agents are cash or credit agents, what kind of clients do they have and where are those clients from, how likely are the agents able to be developed in to ones worthy of issuing credit to, what kinds of synergies are there between an agent's clients and the other rooms IKGH controls. You know, the stuff that elludes your simplistic evaluation of everything to do with IKGH.
    Happy Thanksgiving.

  • brinerbriner brinerbriner Nov 26, 2014 1:04 PM Flag

    If the acquired room does not meet the RCT quota in any given year the prior owner gets zip for that year. How does he make out in that scenario?

  • brinerbriner brinerbriner Nov 25, 2014 7:18 PM Flag

    I wonder if you are even aware that the accounting treatment for the value of the two recent room acquisitions, the ones that EXCEEDED the expectations IKGH built in to the numbers when the acquisitions were made, caused the non-cash GAAP loss. Should those rooms not exceed the annual minimum RCT target number established at the time of the acquisition, no compensation is given to the prior owner for any year those numbers are not met. So in either an under or over performance scenario IKGH wins.
    Just the facts, dude.

  • brinerbriner brinerbriner Nov 25, 2014 1:57 PM Flag

    "B. The write downs on these companies that are coming, because they grossly overpaid."

    Nope. The GAAP loss reported in Q2 has to do with the rooms exceeding expectations. Listen to the conference call.

  • Reply to

    Earnings in a week (December 1st)

    by jeffreybul23 Nov 24, 2014 11:02 AM
    brinerbriner brinerbriner Nov 25, 2014 1:55 PM Flag

    Jeff,

    You simply don't understand. Since the RCT and hold numbers for Q3 are already known NI really just comes down to how much they lost depending on the mix of cash and credit business which effects the commission payout.

AA
15.82+0.0500(+0.32%)Dec 26 4:02 PMEST

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