While I was doing the DD on the Philippines I did see an old article (Oct. 2013) that made reference to Oct as a possible date but I would hardly take that as a reliable source.
It may be worth noting that, in terms of table allocation, the same kind of thing happened for COD Manila. MPEL was rewarded with more tables due to the design of the facility.
My impression from reading the comments of the principles is the same as your's. Essentially that non-gaming amenities will be rewarded with a more flexible attitude towards table allocation. And of course it doesn't hurt that MSC will be one of the first of the new casinos to open.
The point is just to drill down a little to get a higher degree of confidence in the numbers being thrown around for MSC's EBITDA in order to model for 2015/16.
Whether they get to 400 tables remains to be seen but apparently (new information to me) the feeling in the analyst community is that while they have asked for 500 tables the actual amount will be darn close to 400.
Meaning that SA, who has a $57 TP, could be light on 2014 EBITDA by 10% just from organic growth in Macau and that estimate does not even include any EBITDA from COD Manila opening some time in H2.
The performance of the Philippine casino industry in 2013 is so far meeting expectations, says Cristino Naguiat (pictured), the chairman and chief executive of the state-owned Philippine Amusement and Gaming Corp, known as Pagcor.
Pagcor operates 13 casinos in the Philippines and is also the country’s regulator.
“I’m certain that the first five months of the year has been higher compared to the same period last year,” Mr Naguiat told reporters earlier this week.
He estimates that the country’s gaming revenue will reach US$2.5 billion (MOP20 billion) this year, up from US$2 billion in 2012.
“The bulk of that growth will basically come from Solaire Resort and Casino,” inaugurated in March, Mr Naguiat said, quoted by the Business Mirror daily.
Mr Naguiat expects annual casino gaming revenue in the Philippines to grow to US$10 billion by 2017-2018.
Earlier this month, Macau‘s casino regulator felt it necessary to publicly disavow a Hong Kong bank’s claim that the world’s top gambling hub was considering relaxing its infamous cap on table games. As of December 2012, there were supposed to be around 5,500 tables in use in Macau casinos, and the local government capped annual table growth at 3% until 2022 (when the last of Macau’s casino concessions expires). Analysts at the Standard Chartered bank had suggested legislators planned to increase the growth rate to 4%, but the Gaming Inspection and Coordination Bureau (DICJ) called these reports “rumors” and insisted it “does not have any plan to relax the table cap.”
Not everyone is taking this as gospel, pointing to January’s statement by Secretary for Economy and Finance Francis Tam Pak Yuen that the cap could be waived in specific cases where the operator had devoted a certain percentage of the facility to non-gaming activities. Regardless, Union Gaming Research analyst Grant Govertsen estimated that compound 3% growth would result in around 1,900 new tables by 2022, while the 4% scheme would produce 2,800 new tables. Both figures are well below the 3,421 tables Macau Business Daily estimates all those shiny new casinos being built on Cotai are expecting.
It's not a inconsequential matter for sure. If the government sticks to 3%, or about 170 new tables per year, it is going to be very hard for MSC to get to the 400 tables mentioned in the analyst's comment unless they shift tables from their existing casinos.
Looking to expand their presence in Macau, Melco Crown purchased a 60% interest in Macau Studio City in June 2011. This $2.9 billion project is slated to open mid-2015 and will be a full integrated resort like City of Dreams, but featuring a cinematic theme. Located next to the Immigration Station, Studio City will be the first and most prominent casino on the strip to visitors arriving from mainland China. To give an idea of the size of this project, consider that City of Dreams boasts 450 gaming tables and 1400 slot machines. Upon opening in 2015, Macau Studio City is expected to feature 400 table games and over 1200 slots, as well as two 5-star hotels and a variety of entertainment and shopping options. It is reasonable to expect Studio City to do comparable numbers to City of Dreams in a few years, which will be a huge windfall for MPEL shareholders.
Opening before Studio City, Melco Crown is taking their first steps outside of Macau, teaming up with Filipino conglomerate SM Group to create a $1 billion resort/gaming/shopping complex in Manila. The Belle Grand Manila will feature 950 hotel rooms, 240 table games (increased to 365), and 1250 slot machines (increased to 1680). Gambling revenues are expected to grow from $2.5 billion this year in the Philippines to over $10 billion by 2017. Belle Grand is the second of a planned 4 casino resorts that will make up Entertainment City in Manila. Management has recently reiterated that this project is on-schedule and will open its doors mid-2014. As one of only 4 casino operators granted a gambling license in the Manila Bay project, Melco Crown stands to capture a very large portion of this rapidly growing market that is expected to surpass Las Vegas in gaming revenues within 3 years.
Has management spoken at all about the number of tables/slots they expect to have in MSC when it opens?
Macau growth should be strong in 2014, says Wells Fargo
Wells Fargo expects 2014 to be another strong year for growth in Macau, and the firm reports that Q1 Macau gaming revenue is tracking up about 20% year-over-year, well above expectations. The firm expects Las Vegas Sands (LVS), Melco Crown (MPEL), MGM (MGM) and Wynn Resorts (WYNN) to beat Q1 Macau consensus property EBITDA estimates by 3%-6%. Wells thinks valuations in the sector remains undemanding, and expects margins among companies in the space to rise.
GDP growth has been slowing in China since 2011. How has gaming in Macau been doing during that period?
The current slowdown is being orchestrated by the government in recognition that structural changes are necessary for more sustainable long term growth. The government has the ability to step on the pedal if growth slows too much which, IMO, removes the threat of a severe down turn much below the 7.5% target.
Anyone who has been in MPEL for a while knows it can be vulnerable to short term swings based on headline risk. Look what happened at the beginning of Feb after Jan's GGR number came out.
I guess I'm saying that if China's GDP comes in slightly below the target level I don't see it effecting Macau all that much. It is much more perceptual than material in terms of EBITDA. And based on future EBITDA estimates, which are unlikely to be revised by more than 1 or 2%, the stock is not expensive.
Nomura Securities and Wells Fargo Securities estimate this month’s growth in gross gaming revenue will be between 13 percent and 18 percent, Barron’s reports.
Wells Fargo says this month’s average daily revenue was MOP1.3 billion (US$162 million) up to Sunday, 16 percent more than at the equivalent point last year.
It says gaming revenue growth this month could be up to 18 percent higher than a year ago.
Nomura has issued similar forecasts.
MACAU, March 12 (Reuters) - Galaxy Entertainment Group Ltd and Melco Crown Entertainment Ltd look best placed to benefit from the next phase of Macau's development as the world's gambling capital adds eight more mega-casinos by 2017.
The expansion will take place in the Chinese territory's glitzy Cotai Strip and is expected to more than double Macau's annual gaming revenues to $115 billion in four years, according to research from U.S. brokerage Wells Fargo.
Cotai is an area of reclaimed land that is becoming a Las Vegas-style tourist hub with shopping centres, hotels and entertainment to complement the casinos.
U.S. billionaire Sheldon Adelson's Las Vegas Sands Corp was the strip's pioneer, setting up the Venetian casino there in 2007. Adelson's Hong Kong-listed Sands China Ltd is set to open its final casino planned for Macau at the end of 2015 in Cotai, but for Melco and Galaxy, their growth in the area is just beginning.
Galaxy and Melco's casinos will be the first properties to open in the second expansion phase starting early-2015.
That puts them ahead of peers like MGM China and Wynn Macau in the race for dealers and gaming tables, which are both in short supply. MGM and Wynn are also planning to open casinos in Cotai, but at a later date.
Macau: March starts strong, according to checks
According to our channel checks, Macau table-only gross gaming revenue (“GGR”) is MOP11.2b through March 9. The March GGR run-rate is ~+28% YoY or MOP40.0b, after we include an assumption for slot play. Results are trending +5% off of February’s record results. 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%. Our March forecast for MOP36.8b or +18% remains.
Early March results may have seen some continued VIP follow-through (pent up demand) post Chinese NY, according to checks. Many VIPs head to the Island after the holiday subsides. Still, given the National People’s Congress has been held during the checked days, we find March results to date encouraging.
Early market share shows a pull-back by LVS versus last month. As mentioned previously, we believe LVS in February benefited from its Island-high hotel capacity during the high-occupancy Chinese New Year period. We also believe LVS hold was slightly off over the first 9 days of this month. Hold evens out over time.
Market Share. According to our checks, table-only market share through March 9 is: SJM at 20.4% (vs. estimated February 23 share of ~22.0%), Galaxy at 20.1% (vs. ~21.5%), LVS at 20.8% (vs. ~25.0%), MPEL at 14.0% (vs. ~12.2%), WYNN at 14.0% (vs. ~10.9%), and MGM at 10.7% (vs. ~8.4%).
Here is the first part. As someone once said "you can't always get what you want but if you......................
Might not get all they want until after 2022 suggests Secretary for Economy and Finance
One of Macau’s most senior officials moved to head off residents’ protests about the number of gaming tables the government will grant for new Cotai projects.
Secretary for Economy and Finance Francis Tam Pak Yuen said on Friday the government would not grant all gaming tables the casino operators have requested for their new resorts in Cotai – at least until 2022. That hands the problem on to someone else, as the former factory boss is expected to retire from his post within 12 months, after serving as economy secretary since the handover from Portuguese administration in 1999.
Mr Tam also said the new Cotai resorts would be “the last round of large-scale gaming development” here. He suggested it would be enough to make the territory competitive against other gaming jurisdictions for decades.
Speaking on the sidelines of a seminar organised by the Macau Chamber of Commerce on Friday, Mr Tam said, “We do not rule out that the projects can get all the tables they have requested – namely 500-700 tables each – 10 years later
Gaming revenue could reach US$4.5 billion (MOP36 billion) in the Philippines this year, state-run Philippine Amusement and Gaming Corp says.
The Manila Standard Today reports that new casino-resorts in the Entertainment City complex in Manila could send annual gaming revenue as high as US$7 billion within the next five years, according to Pagcor chief executive Cristino Naguiat (pictured).
“This year’s gaming revenues will be driven by the Entertainment City, of course,” says Mr Naguiat.
Casino revenue in the Philippines reached US$2.2 billion last year.
It's 26% as of Dec. 31. I imagine funds have been accumulating this year based on future prospects and that there was some profit taking going on at the end of 2013.
I guess the point I was making was more about pipeline growth and the stock's price relative to that growth than the preferred metric for valuation. No matter if you focus on EBITDA or EPS it stretches anyone's credulity to suggest the stock price can not be justified based on forward looking results. Also, that the sell side is beginning to make adjustments for what is to come as evidenced by the EPS bumps, and what I'm sure are commensurate EBITDA adjustments as well. Basically I'm saying the optics of the trailing p/e make the stock appear richly valued when in fact it is not.
The analysts are starting to catch on. In the last 90 days consensus estimates have gone from $1.79 to $2.07. They'll go up some more. The point being the stock is only trading at 21x 2015 eps. 2015 is a long way off you say? True. But visibility is extremely good unless something hugely unforeseen happens.
A few people have sent me e-mails about getting on the new board at ikghboard. freeforums.net.
Go to the site and register or I can't approve your request. You must register to be able to post there.
Projects. Both its City of Dreams, Manila (Philippines casino resort project) and
Macau Studio City (Cotai casino resort project) are on track and budget. For COD,
Manila, we continue to believe MPEL will outperform Philippine casino peers
given its presence in Macau (junket relationship base/database in Macau), as well
as its ability to leverage partner SM Group’s local database. SM is the leading retail
player in the Philippines, with department stores, supermarkets, and malls. MPEL
believes the Philippines gaming taxation changes will likely be resolved by early
next year with no material change/result to its bottom line – a catalyst for MPEL’s
MCP.PS ($13.18, NR). COD Manila is the only new major casino projected to open
in Asia next year. For Studio City, we continue to believe its geographic position
directly adjacent to the Lotus Bridge border connecting Hengqin Island, which is
building significant hotel capacity and critical mass, is underappreciated. MPEL
set a target opening for COD Tower 5 of late-2016/early-2017. As competitors
segment existing floors in attempts to compete with MPEL’s lead in premium
mass, we look to Tower 5 as a new premium mass casino resort in of itself (with
the possibility of additional table authorization from the Macau government given
its scale and planned amenities). Finally, Japan remains on the table for MPEL –
which should not be overlooked as a potential operator there should gaming pass,
in our view.