China's manufacturing sector picked up further steam in September, a preliminary survey of factory managers showed on Monday.
The HSBC flash manufacturing Purchasing Managers' Index (PMI) hit a six-month high of 51.2, from a final reading of 50.1 in August, moving further above the key 50 mark that divides expanding activity in the sector from a contraction.
The improvement in HSBC's manufacturing survey – which is weighted towards small and medium-sized companies – follows a jump in the official PMI reading to 51.0 in August from 50.3 in July.
No doubt it is one of many in the last 18 months starting with China's GDP slowdown and AERL's contraction of credit. The reported death of their listing sponsor would be easy enough to research for someone over in Macau so I don't see any way that it isn't legit. Upon seeing AERL's PR I understand Bain did some DD on the pre-listing process for the HK exchange and confirmed the importance of the sponsor's role. In other words they aren't making this stuff up. That doesn't change the fact that it's hugely disappointing from the perspective of the listing's timing and the hope for a better valuation. So in the short term the focus of any hope for price appreciation shifts to an improvement in the biz. Specifically on whether they begin to get more direct play, more credit play (both of which help margins tremendously), and the full impact, yet to be seen (they said it should START showing up by Sept-Oct.), from the Royal Arc acquisition.
Frustration was already running very high so no surprise the announcement pushed some people over the edge and they sold. I think you meant to say it has nothing to do with the biz and you'd be right about that. Just an unfortunate situation for all, especially the family of the deceased.
This morning, AERL announced its sponsor’s (investment bank’s) principal (banker) in charge of its HK listing application passed away. Due to this, we believe AERL’s HK listing by introduction could be delayed to 1Q or early 2Q14 from December 2013.
This morning, AERL announced its lead banker in charge of its HK listing transaction passed away. The deceased banker has signed AERL’s listing documents to date, including its draft prospectus filing. In the HK listing application process, a company’s sponsor/lead banker is called on to verify the due diligence performed. Unfortunately, AERL’s former lead banker will not be available for regulators, and if the information signed is inaccurate, the investment bank and the deceased banker are subject to civil and/or criminal liability.
We believe that AERL’s Mainland China investment bank will assign a new lead banker that will need to perform personal due diligence before signing HK listing application documents. The deceased banker had interviewed over 200 agents and met with management multiple times. If a listing application is not approved before year-end, AERL will need to complete a full year audit before listing (its June audit – completed by its HK auditor - lasts 6 months). As such, we believe the likely timeframe for a listing by introduction is now late 1Q or early 2Q14.
While we find the likely delay of AERL's prospective HK listing disappointing given its expected benefits to its US share price, it does not change our overall thesis on shares.
Could have been a misinterpretation of the share authorization vote at the meeting. It's just something that the investment bank wanted them to have in the toolbox before they go on the Asian road show. They're on the road in the US and Canada for a week starting the 30th, then off to HK.
Macau: GGR strength continues; Strong weekend ahead, followed by the calm before the storm - Golden Week
According to our checks, September table-only gross gaming revenue (“GGR”) is MOP14.4b through September 15. Including slots, the GGR run-rate for September is MOP29.9b or +25% YoY. We raise our September GGR forecast to MOP29b or +21% YoY from +16%. With major holidays approaching, improved access to Macau, and sell-side consensus estimates soon to be revisited (upward), we remain bullish on Macau stocks.
Holidays coming. We expect a strong GGR weekend due to the 3-day Mid-Autumn Festival beginning Thursday, September 19. GGR and traffic should be relatively calm early this week and the week following the Mid-Autumn Festival.
Recall that the Mid-Autumn Festival began September 30 of last year and coincided with “Golden Week” (Chinese National Holiday) October 1. Holiday bifurcation (Mid-Autumn and Golden Week) should be beneficial versus last year, in our view.
Holiday visitation should benefit from CY13 infrastructure/other improvements (3 legs of the stool in place). We note that remaining CY13 holidays benefit from additional immigration checkpoints (June CY13), the completion of the Guangdong/Zhuhai intercity mass transit (January CY13), and the relaxation of certain visa policies (January CY13). As such, we expect record holiday visitation levels.
Elections. Today, Macau quietly completed Legislative Assembly elections. Our understanding is that after much saber rattling early on, there was little debate regarding increased smoking regulations ahead of final voting. We note that 16 casinos (likely non-US listed, Peninsula located) recently failed a second air quality inspection.
Based on July and August data channel checks and our September forecast, we believe MPEL (Buy, $30.93) is trending 12% to 14% ahead of 3Q13 consensus; LVS’ Macau division (Buy, $63.54) is trending 8% to 10% above consensus; MGM (Buy, $19.29) China 5 – 7% above consensus; and WYNN (Neutral, $150.35) Macau 1% to 3% above consensus.
Market Share. According to our checks, table-only market share September 1 through September 15 was: SJM at 26.3% (vs slot inclusive August share of 23.9%), Galaxy at 16.8% (vs 17.1%), LVS at 22.8% (vs 22.7%), MPEL at 14.7% (vs 14.4%), WYNN at 10.8% (vs 11.6%), and MGM at 8.6% (vs 10.3%).
The stock is spinning its wheels for sure. I guess the way I look at it is short interest ballooned after the offering announcement and has gone down ever since despite a much higher share count. So short interest is down on an absolute basis and way down as a % of shares outstanding. I think the stability it has shown around $4 has convinced some that barring something unforeseen it is a solid floor and the bias is higher given the expectation that HK will treat the shares better than the US.
We all want to know the answer to that. Probably including AERL's management team. Another thing I'd like to know is how much bearing if any does the listing application have on credit policy. I think they tend to be conservative as a rule but maybe extra conservative to avoid any DSO issues heading to to the listing.