I think that was brought up by squeeze last week. My take is Ho has been cautious on a dividend policy until now for the very reason you mentioned, namely, the adequacy of cash flow to pay for new casino construction. Obviously they are confident issuing equity will not be necessary. Seeing as EPS estimates continue to rise looking out in to 2014 the market is still adjusting to MPEL's EBITDA capacity. All projects are reportedly on time and on budget. Once investors accept there will be no need for dilution the stock will start acting like its peers and hit new highs.
Not sure how long the market can ignore what is happening. From Bain.............
"Buyers short-term and long-term. Given the likelihood of upward consensus revisions for Macau names to match stronger-than-expected market pace, most Macau stocks are “cheaper” than they appear today. In our view, consensus revisions will also meet with multiple expansion over time given infrastructure catalysts and growth not seen in other consumer categories."
Seems as though there is a phenomenon going on where good news is discounted if it isn't great news since there has been so many positives in the news cycle and in actual results. A beat is disappointing unless it is a monster beat as expectations have been raised to the roof. Feb GGR was expected to be very good, looks to be even better, and the sector sells off. Perhaps the group is temporarily over bought and needs to form a base for a while because the story has not faltered one bit.
Macau: Record territory for February; Note on March; Upward consensus revisions likely
According to our channel checks, Macau table-only gross gaming revenue (“GGR”) is MOP30.33b through February 23. The February run-rate with 5 days of gross gaming revenue to go is ~+42% YoY or MOP38.4b, which would exceed October’s monthly record of MOP36.5b by over 5%. Our February forecast is now ~MOP36.4b or +35%, up from our previous range of between +26% to +28%. Our February outlook utilizes channel checked MOP results from the first 23 days (plus slot assumption) and assumes 90% of 4Q13’s daily MOP for the remainder of the month.
Note on March: Over the past 9 years, March gross gaming revenue has averaged 10.2% better than February – but the month-over-month result varies widely from +29% to +1%. Last year, March exceeded February’s result by 16%. We believe March could yield a monthly record – which, depending on hold and other factors for the remaining days of February, could mark a second consecutive all-time monthly record.
Buyers short-term and long-term. Given the likelihood of upward consensus revisions for Macau names to match stronger-than-expected market pace, most Macau stocks are “cheaper” than they appear today. In our view, consensus revisions will also meet with multiple expansion over time given infrastructure catalysts and growth not seen in other consumer categories.
Market Share. According to our checks, table-only market share through February 16 is: SJM at 22.0% (vs. estimated January total share of ~23.0%), Galaxy at 21.5% (vs. ~20.2%), LVS at 25.0% (vs. ~21.8%), MPEL at 12.2% (vs. ~14.5%), WYNN at 10.9% (vs. ~9.2%), and MGM at 8.4% (vs. ~11.5%).
Not that I mind the positive vibe for the stock coming from the Japan talk but is it justified given that actual revenue is 5 years out? I'm constantly amazed at which shiny ball the market focuses on while with MPEL it doesn't need images of gaming in Japan to go much higher.
I'd be glad to send you an e-mail w/ his last note attached if we can find a way that doesn't compromise the privacy of personal e-mail addresses. I suppose I'd be willing to let you use my Yahoo address and I could reply with the note attached if you have any interest.
My apologies to anyone else who reads this. I won't be sending it out to anyone who asks for it.
Reading thru David Bain's last note on MPEL. Even though he makes this comment.......
Valuation. With both City of Dreams, Manila and Macau Studio City (halfyear)
included into CY15 estimates, MPEL trades at 13.1x EV/EBITDA, well
below peers – LVS ($78.79, Buy) and WYNN ($221.28, Neutral) at 15.5x, 18.3x,
respectively. Based on its pipeline and weighting to mass/premium mass gaming,
we do not believe MPEL’s discount to peers should exist. Our price target goes to
$57 from $54 based on our sum-of-the-parts valuation.
............when I look at his model for 2014-15 I don't see any actual accounting for pipeline openings in his EPS or EBITDA assumptions. He breaks out the existing footprint in those terms with attributions for each casino now operating but I see no line for COD Manila so I'm assuming he did not include MSC 2nd half expansion either.
Do we know enough about COD Manila to make any EBITDA assumptions? Have you made any? Because if I am right about Bain's note I'd like to get an idea of how conservative his $1.56 EPS estimate could turn out to be. Any thoughts?
I wouldn't say $42 is a rock solid floor but it has held up very well as the stock goes sideways before the next catalyst driven leg up.
Maybe this in part explains why it has appeared to be climbing a greased pole lately.
Potential Macau Slot Route Closures; Inconsequential to our MPEL thesis
The Macau government will ban all standalone slot parlors over time, according to Francis Tam, the Secretary for Economy and Finance in Macau. The closures would negatively impact MPEL’s Mocha Clubs. We find longer-term potential slot route closures as inconsequential to our MPEL Buy thesis, though acknowledge it as a small negative.
From an EBITDA perspective, Mocha represents ~2% of CY15E EBITDA (inclusive of MPEL’s Philippines and Macau Studio City project openings) and less than ~1.5% of CY16E EBITDA. Given closures will likely come over time, and will also be part of expected discussions in 2015 and 2016 focused on concession renewals, we see the likelyhood for less Mocha closures in CY14 than in the subsequent years.
Of note, there is an opportunity to move certain Mocha standalone parlors within hotel casino establishments - and out of commercial establishments – in order to conform with Mr. Tam’s initiative, keeping Mocha establishments open.
We note that MPEL’s 4Q13 results included 3 slot route closures (disclosed in MPEL’s earnings release) due to current regulations governing slot parlor proximity to residential neighborhoods. As such, 4Q13 Mocha EBITDA was -4% sequentially. There was no discussion or investor questions regarding the disclosed Mocha closures on MPEL’s 4Q13 earnings call.
Maintain Buy and $57 price target.
It isn't necessary for me to approve your request to post on the new board for you to read the posts there. So if you are someone who only wants to observe with no interest in posting you are able to do so. I don't even think you need to register. You can view the board as a guest.
Or you can keep posting right here. It's up to you.
Today's action would make all the sense in the world after the PMI number (bringing China growth concerns back in play) if not for the sector move higher.
Not sure why the cheapest and fastest growing concessionaire is struggling to stay up with the pack today. Maybe someone doesn't like capital being spent on a divi instead of plowing back in to casino construction????
E-mail me at my Yahoo e-mail address under my alias, drjackcar, and let me know what ID you have been using on Yahoo. Then I can give you permission to join the freeforums board.
Leave this one to the mindless bashers.
Raising target price and estimates; Convention story deeper than CONEXPO-CON/AGG
Following a relatively solid 4Q, we raise our price target $2, and our CY14 EBITDA estimates 5%. We believe 1) Las Vegas convention strength transcends CONEXPO-CON/AGG; 2) Strip property refinements are underappreciated; 3) Macau Peninsula outperformance and dividend payments for parent debt repay continues; 4) its opening in Cotai increases MGM China’s EBITDA by over 70%, and expands MGM’s stock multiple given a higher weighting of Macau EBITDA; and shares are reasonably priced.
We believe 1Q is not a one hit RevPAR wonder stemming solely from CONEXPO-CON/AGG (rotates to Las Vegas every 3 years). While management kept its long standing policy of providing only current quarter RevPAR guidance, we note the LVCA recently cited 70 new CY14 conventions of at least 500 attendees each. We believe the overhang from President Obama’s negative comments regarding Las Vegas visits (CY10) has ended, and convention seekers are steadily being priced out of “temporary” bulk convention markets, such as Los Angeles, San Diego and Miami – and gravitating to Las Vegas’ higher entertainment/capacity value alternative. Las Vegas convention attendance is still 18% below its 2006 peak level.
We view the Las Vegas convention story as a multi-year one, and note that even after 2011’s 1Q 16% RevPAR growth (which benefited from not only the CONEXPO-CON/AGG conference, but also the initiation of resort fees and a very easy comparison off CY10), MGM reached mid-single-digit RevPAR increases the following year. We believe MGM’s 1Q guide of 10% revPAR growth should be built upon 1Q next year - not only the quantity, but the quality of the Las Vegas conventioneer continues to improve, in our view.
Outside of MGM’s higher convention mix, which we believe positively impacts its EBITDA by at least $70m for every 100 basis points upward (~management’s current guidance), MGM benefits from un-lapped property improvements, such as the Michael Jackson show, day and night clubs at Mandalay, a continuation of higher quality MGM events, forward hotel refurbishment and rebranding to the Delano, room refurbishment of core Mandalay rooms, entry and floor designs at Monte Carlo and NY NY among other improvements. Notably, Strip traffic across from Monte Carlo and NY NY is ~28 million persons a year – and we believe represent a somewhat untapped market opportunity for Monte Carlo and NY NY.
MGM China’s 35% YoY EBITDA increase outpaced Peninsula rival WYNN by 300 basis points –we expect outperformance of Peninsula peers (in general) to continue due to continued property refinements and a larger push of its M Life loyalty program in the region.
We believe MGM China dividends, are working to not only deleverage its parent, but also drive equity value for MGM China (which consequently drives MGM’s value). We believe MGM’s Cotai budget increase to $2.9b from $2.6b will likely serve to increase target prices
for most given the Street mentality of utilizing ROIC methodologies for Cotai projects...monkey see, monkey do.
CY14/CY15 EPS to $0.34/$0.43 from $0.21/$0.33. MGM trades at a reasonable ~12.7x CY15 EV/EBITDA. Our new price target of $31 from $21 is based on our sum-of-the-parts model (12x CY15 Las Vegas, 15x Macau).
Looking for opinions. Anybody think the market hasn't already assumed the two divi's will be approved and as such have baked them in to the price? Or will approval be worth a bump? Trying to think this thru.
One thing is for sure, the divi will open the stock up to income funds who could jump at the chance to get a yield plus healthy capital appreciation. You have to wonder how many of those types of funds have MPEL on their radar.
anyone up for moving to a new board?
I already posted this once but it was deleted, I guess because I wrote the new site's address. It is ikghboard . freeforums . net obviously without all the spacing in between.
The way this will work is for anyone interested to send me an e-mail at drjackcar using my Yahoo email address under the same name. Then I can allow you to join so long as you let me know what alias you have been using at Yahoo. If you don't have an alias I recognize maybe we can work out something else.