Things are not looking good for EGT right now after the RS. A High of 2.61 post-split...down to a low of 1.60 post-split...1.60 = .10/sh before all the the RSs were introduced over the last 4 years. Given the elimination of debt, that PPS is not a strong market endorsement of EGT's future success. One other additional downside of a RS not discussed previously is that because the RS raises the PPS, it makes EGT more attractive to short - which probably explainse the temporary surge to 2.61 the morning after the RS (short sellers buying in)
Unfortunately, the market may decide NOT to wait for EGT to renegotiate their contract with NAGA before pushing it off the cliff. A lot depends on the next 1-2 10Qs. If EGT announces new contracts in reasonably large ACTIVE venues, then MAYBE this can be a turn-around story. If this company cannot demonstrate they are capable of generateing and new recurring PROFITABLE streams of revenue, then stick a fork in it - EGT is cooked.
On the positive side NASDAQ closed over 5000 yesterday, so at least you can use EGT as a tax writeoff against the profits that you have made elsewhere in the market.
The fat lady is practicing her musical scales backstage, good luck to all.
Sorry. I am still trying to remember what I had for lunch yesterday! You might try clicking on the [My Posts] tab at the top if this page and go back to around mid-June 2012 (previous 1:4 RS)
OK BeautifulDay, that is reasonable, but I do not see that informaion plublished anywhere...please site your source.
I see that the end of the Rights Offering PR Newswire indicated , "... aggregate gross proceeds of approximately $15.0 million...." but I do not see your number published anywhere.
As was pointed out to me via email, the math in my previous post is off...Instead of a total of 1:8 RS impact to your total share holdings over the past 3 years, the correct number is 1:16 because the 2nd RS was applied to shares that were previously RS'd in 2012....(sigh)
They company will say this is a 'cash neutral' transaction blah blah blah...but the best way to increase share value is to GENERATE PROFIT...a novel business concept that EGT may want to consider at some point in the near future ...or put NEW people in Sr. Management roles that know how to make that happen.
If anything GOOD can be pulled out of this "business", it would be this....
Regardless of how many times EGT Management Reverse-Splits the stock (1:8 and counting...) or makes blatent power grabs for control of the company through BS transactions like the "Rights Offering", a dollar is still a dollar (more or less) and now EGT can show a better EPS because the denominator in that calculation just got 4x smaller. Now we see if EGT management - especially Mrs. Mangini can do their jobs.
PPS @ 1.75 - 2.00
EPS @ .03 -.04
This opens up the door for institutional and investment investors ...assuming that the PPS does not drift down again. EGT needs NEW contracts and MORE gaming chip sales. MAKE IT HAPPEN!
Final observation: a 4x smaller float will probably make the EGT PPS a little more volatile so we could see bigger swings (assuming that anyone wants to buy this stock other than the market makers)
No typhoons, tsunamis, torrential rain, floods, fires, earthquakes, landslides, tornados, locusts, rabid monkeys, snakes, packs of ferral animals roaming the streets, or any other acts of nature (or armed forces) to interfere with gamblers getting into casinos to spend their money.
Maybe EGT will squeeze out a .01 positive EPS for 1Q2015....unlikely w/o a RS to reduce the share count, but it's a nice thought anyway.
The CNBC article and video brought up at least 4 issues to consider:
1. "...The bullish call is premised on HOPES that the world's biggest gambling hub [Macau] will see signs of a recovery in the second half of 2015...."
2. EGT is not a Macau gaming stock. The politics of Macau are separate and aside from the rest of SE Asia
3. Start video @ 2:25 ... "...We are not sold on the Philippines as a prefered destination for outbound shiny gamblers, but time will tell"
4. Large companies are starting to eye Cambodia and Vietnam. They have deep pockets and can steal contracts. NAGA is without a doubt THE #1 CONTRACT to win in all of Cambodia and Vietnam. EGT has proven that. Just compare the WUD of NAGA to the WUD of any other EGT venue. Those historical revenue results are all in the SEC public domain.
I agree that EGT will get to 1.00 (or perhaps higher) but it will take a RS to get there.
NOTHING has changed in the ongoing revenue stream to warrent a 2x+ change in the current PPS.
Sorry Booya, You guys can't hype/pump EGT this time because there is a documented history of performance of ALL active EGT venues in the 10Qs. Hype only works in the absence of FACTS.
NASDAQ granted EGT a 180 day extension on October 17 (see below). Since then we have heard exactly NOTHING from Managerment on how they intend to remedy this issue, be they did manage to grab a larger % of the company through the Rights Offering.
Because of the required 10 consecutive business days above 1.00 the drop dead date is really March 30 and not April 13. If EGT is not above 1.00 by March 30, then it will not be able to meet the mandatory 10-consecutive business day requirement.
IF EGT goes private and offers shreholders a 50% PREMIUM over the current PPS of .4357, that would only be .65/shr...It is unusual for shareholders of a weak company like EGT to be offered a 50% premium. so .65 might be a BEST CASE.
Would that share price put your investment in the black or would you still be underwater?
HONG KONG, Oct. 17, 2014 /PRNewswire/ -- Entertainment Gaming Asia Inc. (NASDAQ: EGT) ("Entertainment Gaming Asia" or "the Company"), a gaming company focused on emerging gaming markets in Pan-Asia, today announced that on October 15, 2014, the Company was notified by The NASDAQ Stock Market LLC ("NASDAQ") that it has granted the Company an additional 180-day grace period, or until April 13, 2015, to regain compliance with the minimum $1.00 bid price per share listing requirement.
According to the notification, if at any time during the second 180-day grace period, the minimum closing bid price per share of the Company's common stock closes at or above $1.00 for a period of ten consecutive business days
Not exactly. Based on daily volume, they could never have aquired the same # of additional shares in the open market (Avg Daily Vol ~ 26K). The Rights Offering allowed them to increase their % of ownership because not all rights were exercised.
I cannot explain the logic of a Management team that does not make (what I believe to be) logical choices based on sound reasoning.
Can YOU explain why EGT would spend millions to build a Dreamworld Casino in Pailin in 2012 after doing extensive Due Dillegence and Market Study only to give it away for pennies on the dollar in June 2014? I cannot believe that the gaming market in Pailin completely and unexpectedly colapsed between ground breaking in December 2011 and the sale in June 2014 (EGT Mgmt began looking to offload the property as early as 4Q2013). I think that Management did a poor job of estimating potential revenue and market share and (we as shareholders) paid dearly for that inexcusably poor analysis and execution.
To my knowledge, all of those same folks are STILL making decisions at EGT. Not one was fired. That makes ALL of their subsequent decisions suspect.
When was the last time you saw an analyst cover EGT?
When did the last (most recent) Institutional investor come on board? The largest Institutional investor, Renaissance Technologies, LLC, holds fewer shares that company insiders - in some cases by a very large margin.
We will see how well this Rights Offering stock purchase goes for EGT. If it goes poorly (and we will know in 60 days or less if we are able to maintain a NASDAQ listing), it will break the back of the company and Melco will pick up selected pieces at firesale prices. Retail shareholders will lose their investment $$$ other than a tax offset against 2015 investment profits wherever you may find them.
Not a pretty picture, but it they are the cold, hard facts based upon information available to me. If you have other contrarian verifiable information, I would love to hear it.
@Paul, That would explain the Rights offering vs. RS so that Management could secure a larger % of the total shares issued. They could have never aquired teh same % of shares in teh open market without triggering a significant increase in PPS.
If it goes Private, that will surely trigger a lawsuit that Management purposly dragged feet/sabotaged company to force PPS down in order to gain majority control of company. I don't know if a case can be successfully argued for that, but it would be in the realm of possibility....and a huge disappointment.
EGT recognizes revenue of gaming products upon delivery to customer City of Dreams Manila had a soft opening on 12/14/14/, so I would imagine that all revenue would be recognized in 4Q2014. How much revenue has EGT generated for Gamin Products that was not tied directly/indirectly in some way to the Ho or Packer families or Melco? Can EGT survive on the table scraps of MPL without winning other significant contracts?
EPS is based on EARNINGS not gross dollars. City of Dreams Manila is a $3.3M contract (gross dollars). How much of that is profit? 50%? 40%? 30%? 20%?
Regardless of the bump in cash that this one event will result in, I do not think that it will be enough to warrant a 2x+ in the current PPS. Pump n Dump aside, sustained growth in PPS is based on increases in ongoing revenue. EGT has not demonstrated that they can operate a significantly profitable stand-alone Dreamland boutique casino. The expectation that every Dreamland boutique casinos will be another NAGA is naive. Naga has a protected territory and is located in a large metropolitan city. Dreamland casinos were border town casinos with significant competition. Even the Slot Hall in the T.B. Highland resort is for the most part - a poor performer. Dreamland has learned that "Field of Dreams" is just a story...just because you build it, does not mean that they will come.
The NAGA contract, EGT's single most significant revenue stream, comes up for renewal relatively soon. I expect the contract to be much more expensive and the competitive bidding to be significantly stronger that it was for the existing contract because EGT has demonstrated the value of the contract over the past few years. There are large competitors active in these markets that were not interested in SE Asia when EGT won the current NAGA contract. A competitor could overbid the contract to win it knowing that winning the NAGA contract will also KILL a regional competitor (EGT) all at the same time.
Management could not have purchased the # of shares in teh open market as they bought in the Rights Offering (avg daily vol 26K)
A reverse split is cash neutral and the percentage of shares that they own will not change
With EGT stilling around .50 for months with no new revenue drivers announced, a RS seems to be the only way EGT can stay listed on the NASDAQ. I do not think that you will see that announcement until they report in March. Hopefully management will be able to maintain a +1.00 PPS after the 1:4/ 1:5 RS....they didn't the last time, but maybe now that they have more skin in the game, they will do a better job.
They have done qa good job at eliminating debt, but a poor job of bring in new revenue streams that have an impact on the bottom line. "giving away" a casino to a Govorner's wife may make good political sense, but it sose shareholders no good to lose that money when there is nothing to replace it.
We have a deadline. We will just have to wait and see how Management chooses to deal ith it and how well they communicate their decision to the shareholders - not something that they have done well in the past.
We are quickly aproaching the 60 day countdown to delisting.
If things don't quickly change significantly, I am guessing that Management will be forced to do another 1:4 reverse split. That is a Cash neutral transaction will reduce the Outstanding share count to 7.525 M and increase the PPS of 1.75-2.00 getting EGT out of the NASDAQ crosshairs. Expect the PPS to fall afterwards to ~1.50 because a reverse splits signals a weak company, TWO reverse splits is a sign of a desparate company.
On the plus side, given that extremely low outstanding share count and associated float, EGT will finally be able to generate an interesting EPS which will hopefully get the attention of Wall Street investors. If that happens and volume picks up, the low float will cause the PPS to move on low volume (Pump and Dump schemes could really move this stock). Then it is just a matter of generating NEW and profitable revenue streams and locking in NAGA for another contract to hold on to those PPS gains. If they can do all that, then this company has a future. If not? Not.
My point is that 0200hk has owned significant share % of EGT for years and has not done much to drive the PPS.
2014 is in the books and we will find out what happens with delisting around the same time we get a final Report Card on EGT's 2014 performance.
Melco's City of Creams in Manila will open next year and we will have the answer to the question of is EGT involved with that project in any way? (no EGT-Melco contract for EGM management has been announced, we might ). Chinese New Year is 2/19/2015.
From Melco PR ....
"Melco Crown chairman Lawrence Ho said City of Dreams Manila, the second of four resort-casinos in Entertainment City, would have a soft opening next month and a grand launch before the Chinese New Year next year.
“We are excited about the imminent opening of City of Dreams Manila. We are planning on opening the doors to customers in December for a sneak peak of what the property has to offer before a grand opening prior to Chinese New Year in 2015,” Ho said."
IGT is supplying the EGMs to Melco City of Dreams...
Casino equipment supplier International Game Technology says it will equip the City of Dreams Manila casino-resort.
The company says it will supply the City of Dreams Manila with IGT Advantage systems, sbX Floor Manager and Service Window, Xtra Credit, Point Play, Scheduled Return Play, Carded Lucky Time and Message Blast.
IGT will also supply the Philippine casino-resort with IGT Tournament Manager and with 52 video poker machines.
I think that we diverge at one particular fork in the road....
Since none of the business fundamentals have changed (no new contracts, no new Dreamland Casino locations, or new RFID products), I look at past performance as an indicator of future performance. because they have a zero investoemnt in EGT the opportunity for profit was even greater than if that have the current nominal PPS investment.
Other than the iHub led Pump n Dump, the PPS has not moved significantly UPward in YEARS, however we ARE currently at multi-year LOWS (~.11 PPS pre-split)..that is not ALL TIME low but close enough for me to believe that Melco thinks of EGT as something that they would rather scrape off the bottom of their shoe as opposed to growing the company in any significant way. I fear that EGT is nothing more than a tax offset for Melco.
We don't have long to wait. They have 3 months to double the current PPS or announce another Reverse Split if they want to keep the company off the pink sheets. We will know their plans about the same time that the 2014 10K is released.
Greener pastures in 2015